Congratulation on having your Second House,Most of the people in India are choosing second house for different purposes be it investment,Location interests, movement to different places.
After having two houses, both can end up in self occupied, with your parent staying in one house and you will be staying in another house, now this can be termed as 2 self occupied properties.
If you are staying in one house and you rent out other house, then it can be termed as one self occupied and one let out property.
As per Income tax law, you can claim maximum of two self occupied house and other houses will be deemed as let out or rent out property.
Before FY 2019-20 only one self occupied was allowed and remaining as Let out property,After FY 2019-20 that was changed to max two self occupied and remaining termed as let out property.
House Property Related to Income tax
a. Self-Occupied House Property
Self-occupied house property means ,a house is used for own personal purposes. Personal purpose can be your parents , spouse and children. Even if the house is vacant ,house property can be considered as self occupied.
b. Let Out House Property
Your house property which is let out for the full year of some month os year also is considered a let out house property for income tax purposes
Home Loan Tax Deduction
a.Income Tax Section 24:
Under Section 24 of Income tax, you can claim maximum upto 2 lacs per year on the interest you paid.
Even you paid 3 lacs on House Loan interest per financial year also, you can claim maximum 2 lac, If interest of 1 lac is paid, then can claim 1 lac as interest .
To claim 2 lacs under Section 24, need to meet certain conditions else you can only claim maximum upto Rs.30,000
Condition 1:Loan taken after April 1999, and if purchasing or construction not completed within 5 years of loan approval.
Condition 2:Loan taken before April 1999
Condition 3:Loan take After April 1999, for purpose of repairs.
b.Section 80C Principle Repayment
Under Section 80 C of Income Tax, you can claim upto 1.5 lacs overall, which includes PPF,Insurance Premiums,School Education,Education Loan,Home Loan Principle,Sukanya smriddhi Yojana (SSY),Tax saving FD for 5 years etc.,
Home Loan Principle one component of Section 80C,Home loan EMI will have two components, Principle and Interest.
Principle component can be used to claim under 80C,Overall 80C components is 1.5 lac, so you ca claim maximum upto 1.5 lacs under Section 80C
Sub components like NPS etc, can be claimed above 1.5 lacs.
c.Section 80EEE:First time Home Buyers
A first time buyer of house can tax benefit of Rs 50,000,Condition is that, this property should be the first properly at the time on Home Loan Sanction.
Having 2 Properties on Home Loan
Example:Mr.Avinash owns one property in Pune and and one property in Mumbai .
If both properties are used by yourself or your immediately family like parents then both houses can be claimed as self occupied after FY 2019-2020.
If one property is self occupied and one property Let out, then you claim one house as self occupied interest and other
Section 24 :Add interest part of both houses, and can claim maximum of 2 lacs
Section 80C: Add Principle part of both houses and can claim maximum of 1.5 lacs
Hope this helped your understand ,how to claim tax, if you have 2 self occupied properties and terms related to the Income tac sections.
More in-depth article with full details on Home Loan will be published soon. stay tuned.