Tax exemption on buying multiple houses

People are commonly under the thought that one can own any number of properties, but one cannot avail more than one home loan at a time. Well, this is not true.  There is technically no constraint on the number of properties you can own, correspondingly there is also no restraint on the number of home loans you may avail and claim tax benefits. The amount of home loan that you can avail for all the properties depend on your earnings, expenses and other fixed liabilities.  In short the amount of loan depends on your ability to service the same.

Home loans and tax benefits

You can claim a deduction (Tax benefit) for interest payable on a home loan taken for purchase, repair, or reconstruction, construction of any property under Section 24b. If you own only one residential house property occupied by you, you may claim the maximum deduction on the interest repayment on a loan for that property. However, it is limited to Rs 2 lakhs per annum. Conversely, in case the fund is borrowed after 1st April 1999 and construction of the property has not ended within a period of five years from the last part of the financial year in which the money was loaned, the deduction in respect of the interest claim shall be limited to just Rs 30,000. In case you let out any property or properties owned by you, you may claim deduction for the entire interest paid, with no upper limit against the rent received. Nevertheless, if you own more than one house property and both are self-occupied; you need to choose any one property as self-occupied and the other property/properties are treated as let-out.  Accordingly, once any such property is treated as let-out, you can get tax exemption for complete interest paid.

Long-term capital gains tax: Exemption on buying multiple houses

Deduction on the interest payment is available, for any residential or commercial property owned by you. It is obtainable, irrespective of whether the money is borrowed from a housing company or a bank, with the intention of repairs, purchase, construction, reconstruction, etc. Any interest that is paid during the construction stage can be amortised and claimed in five identical instalments, starting from the year in which the construction is finished and ownership of the house is taken. As per the provisions of Section 80C, tax benefit on repayment of principal; you may claim up to Rs 1.5 lakhs for repayment of housing loan taken from specified institutions, including cost incurred for the registration cost and stamp duty of a residential house. Even though you can avail home loans for more than one property, the amount of deduction however, shall be limited to Rs 1.5 lakhs. The amount of deduction includes items like life insurance premium, provident fund contribution, tuition fees, NSC, ELSS, PPF contribution etc. This deduction can however, be claimed only after you have taken possession of the property. Did you start repaying the principal of a home loan prior to taking possession? This benefit is not available to you then. Please note that you are not eligible for this deduction in case of loan taken from your friends and relatives.