What are the Tax Benefits on Second Home Loan in India

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While most home loan borrowers know the income tax benefits associated with their loans, many buyers are unsure whether such benefits are available if the loan is refinanced. The answer is an emphatic yes. Continue reading to learn more about Tax Benefit on Second Home Loan.

While buying a home has traditionally been regarded as a solid investment, home loan tax benefits were previously limited to only one loan. Individuals can now claim tax savings on up to two home loans.


Before the 2019-20 fiscal year, an individual who owned two residences could claim income tax benefits on the owner's self-occupied house. The individual was obligated to pay taxes on the second house or property based on notional rent, the amount received as rent from the property. 

Benefits from a Second Home loan

The government made a significant change to the fiscal budget for 2019-20, allowing taxpayers to declare two homes as self-occupied. As a result, in addition to their first Home Loan, individuals can now claim tax benefits on a second Home Loan.


The following are the appropriate Home Loan tax benefits under various provisions of the Income Tax Act 1961:


Sr. No.

Relevant Sections of Income Tax Act

Type of Home Loan Tax Deduction

Maximum Permissible Limit of Tax Benefits

1. a

Section 24(b)

Interest repayment on a self-occupied property.

Rs 2 lakh

1. b

Section 24(b)

Interest payment on a let-out property.

Complete interest paid can be claimed


Section 80C

Principal loan amount, including registration fees and stamp duty.

Rs 1.5 lakh.


It should be emphasized that all of the income above tax benefits are calculated per person, not per property. As a result, applying for a shared House Loan for a second home might provide additional help. Each property owner can claim income tax benefits on the second loan, subject to the fundamental principle and interest payments.

How to Apply for Tax Benefit on Second Home Loan

Make sure your first and second mortgages are in your name. If you're applying for a combined loan, make sure you're a co-owner of the only owner of both properties. Calculate the tax benefit of a second home loan ahead of time to save time and headaches afterward. You can also use the free tax Benefit on Second Home Loan calculator found on many reputable banks' official websites.


To alter your TDS computation, submit your Home Loan Interest Certificate to your employer. Failure to do so will result in the regular TDS deduction from your salary without benefit. You may also be needed to produce a copy of your loan sanction letter.


You would have to file income tax returns to receive the tax benefits if you miss following step 3.

There are various reasons to acquire a second house, including maintaining a dwelling in your hometown, purchasing a vacation home, or creating a second income stream by renting out your property. Now there's a tax. You may want to consider taking out a double Home Loan to construct another nest for your family now that tax incentives are available.


Tax Benefit on Second Home Loan


While you may not be able to deduct the principal amount of your loan under Section 80C in the instance of your second home, you can remove the interest component.


Previously, interest on a rented or considered rented residence was entirely deductible. In other words, if the interest paid on loan used to buy the second home was higher than the rent earned, the difference might be offset against other sources of income. However, such adjustments are now subject to Rs 2 lakh. Any remaining interest, if any, can be carried forward for up to 8 years to be used solely against income from the home property and not under any other heading.


Any additional income after the deduction of Rs 2 lakh in the case of self-occupied property cannot be carried forward or offset against other income.

Second Home Loan Tips for Experienced Home Buyers:

Are you debating whether or not to make an offer on your second home in this hot market? It will most likely be an excellent investment or a place to reside in your golden years. Being boastful about your home-buying experience is not a smart idea. Real estate is a continually shifting market, with dramatic and abrupt shifts in trends and pricing.

Keep the following suggestions in mind when purchasing a second home:

  1. 'Location, Location, Location' is true here as well.
  2. Learn about the neighborhood and know why you're buying, whether for tax benefits, an investment, or a home for your retirement years.
  3. Determine the property's genuine rental viability if you plan to rent or lease it. Also, confirm that the facility meets the renters' expectations and seek additional information from the neighborhood/residents association.
  4. Obtain a cost estimate for all potential expenses. Are you still making payments on your first mortgage? Then double-check that you're eligible for the funds you'll need. For second-time purchasers, interest rate rules may change.


You may purchase a second house as a vacation property or investment or diversify your portfolio. In any case, you won't be stressed. Along with Tax Benefit on Second Home Loan, it attracts 0% taxability when treated as self-occupied. On the other hand, if it isn't your primary residence, you'll have to keep it up. When calculating the taxability of a property not utilized as your primary residence, you must consider the rental revenue. As a result, consider all tax implications and interior design options when purchasing a second home.





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