There isn’t any restriction on the number of properties you can own. Likewise, there is no restriction on the number of houses for which you can take home loans and claim tax benefits, either under the tax laws or the laws of financial institutions. However, the amount of home loan available to you for all the properties taken together shall depend on various factors like your earnings, age and your ability to repay the loan. You can also avail certain tax benefits for interest paid and/or for repayment of the principal amount, with respect to your home loan.
Tax benefit on interest payment
A home loan is usually taken with an intention to purchase, construct, repair, or renovate any property, whether commercial or residential. Under section 24(b) of the Income Tax Act, you can claim a deduction for interest payable on your home loan. This deduction on interest payment is available, for any sort of property owned by you. Whether you borrow the money from a financial institution or from your friends and relatives, you are entitled to claim this deduction.
In case you own only one house, which is occupied by you, the maximum deduction on interest repayment is restricted to Rs 2 lakhs per annum. In case of under-construction property, this deduction on interest payment is available from the year in which the construction is completed and possession is taken. However, if the construction is not completed within five years after taking the home loan, this deduction gets restricted to Rs 30,000 only. Therefore, it is important to get the construction completed within the stipulated time limit.
Tax benefits for those who own multiple homes
According to the provisions made in the interim budget 2019, you can have two properties as self-occupied properties. However, the deduction with respect to home loans shall still continue to be Rs two lakhs for both the properties taken together. This will be beneficial for the tax-payers, who own property in their native place and whose parents stay in the other property owned by them.
Additionally, you can also claim a deduction on the processing fee, as well as any other fee like prepayment charges, under this provision.
Tax benefit on repayment of principal
Section 80C of the Income Tax Law allows you to claim up to Rs 1.5 lakhs for repayment of the principal component of a housing loan. This deduction is also available for the amount you pay for registration and stamp duty of your residential house. There isn’t any restriction on the number of houses for which you can claim this deduction. However, just like a deduction on interest payment, this deduction can only be claimed after you take possession of the property. If you have started repaying the principal of a home loan before taking possession, this benefit would not available to you.
Prominent non-banking financial institutes like Finserv Markets, provide home loans at lower interest rates and other lucrative features. So if you are looking for the best deal on your loan, considering Finsev Markets would be extremely fruitful for you in the long run.
Finserv Markets, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!
