Now Reading: Tax benefits on multiple home loans allowed with limits
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Tax benefits on multiple home loans allowed with limits
There is no legal restriction on the number of home loans an individual can take in India, and borrowers can claim eligible tax benefits on all of them, subject to conditions under…
There is no legal restriction on the number of home loans an individual can take in India, and borrowers can claim eligible tax benefits on all of them, subject to conditions under the Income Tax Act. Lenders decide based on repayment capacity, income and credit profile.
Under the old tax regime, interest deduction for self-occupied properties is capped at Rs 2 lakh per year combined. For let-out properties, actual interest can be claimed. Loss from house property set-off against other income is also limited to Rs 2 lakh per year, with the remainder carried forward for up to eight years.
Principal repayment qualifies under Section 80C, capped at Rs 1.50 lakh overall. Under the new tax regime, principal and interest on self-occupied properties get no deduction, while let-out property interest is restricted to taxable rental income.
Indian Opinion Analysis
The key constraint for borrowers with multiple home loans is the combined Rs 2 lakh interest deduction cap under the old regime, unchanged since 2014-15 despite rising property prices and loan sizes. The Section 80C limit of Rs 1.50 lakh has also remained static since 2014, forcing taxpayers to choose between home loan principal, PPF, ELSS and life insurance premiums within the same umbrella. Under the new tax regime, which most salaried employees now default into from FY24, these deductions vanish entirely for self-occupied homes. The carry-forward rule for house property loss, capped at Rs 2 lakh per year, means large interest outlays on multiple let-out properties can take years to fully offset. Taxpayers with multiple loans should model which regime maximises net benefit, especially if rental income is low relative to interest.
Source: livemint.com
This brief was synthesised by AI from the source linked above.
