How to Claim Tax Benefits If You Have Multiple Houses?

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25 JUNE, 2021

When it comes to claiming tax benefits for multiple homes, you may find it rather confusing. But you should know that there are no restrictions regarding the number of houses you can own or a limit on the number of home loans you can take. The loan for your second or third house shall only be sanctioned based on your repayment and financial eligibility. So, claiming home loan tax benefits on the principal and interest component is allowed up to a certain limit.

However, with multiple houses, you can declare only two of them as self-occupied. If your family is residing in more than two homes, then you need to offer notional rent. It is a rent that you are presumed to be earning from a residential property even if you do not actually earn it. Notional rent is taxable as per Income Tax Act, 1961. The total loss from house property can be adjusted with other income sources. But there is a limit on the amount you can claim as a deduction for the loss under house property. So, read more to understand how you can avail home loan tax benefits if you own multiple houses.

Income Tax Benefits on Principal Amount
You can claim a deduction on principal repayment of your home loan under Section 80C of the Income Tax Act. A maximum sum that you can claim is Rs 1.5 Lakh per financial year. This also includes stamp duty and registration charges for your new home. But if you are repaying multiple home loans, then you should know that the tax benefit on the principal component is capped at Rs 1.5 Lakh. Therefore, you can claim a combined amount for various home loans under Section 80C.

Income Tax Benefits on Interest Component
Under Section 24(B) of the Income Tax Act, you can claim the interest component of your home loan as a deduction. The maximum amount you can claim for all self-occupied houses is capped at Rs 2 Lakh. In case you have rented your home, then it is termed as let-out. But if it is empty, then the house shall be called as deemed to be let-out even if it is not rented.

For the remaining houses which are rented or empty, the interest can be claimed in full if more than two houses are self-occupied. However, the losses under house property can be set off against other income heads up to Rs 2 Lakh per year. The remaining can be carried forward and set off in the next 8 years.

With this, you can now avail home loan tax benefits for your houses without any hassles. But ensure you plan out your finances well in case of other investments. To avail a loan, learn about your financial eligibility, check your home loan EMI using an online calculator and apply for the home loan with Kotak Mahindra Bank.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

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