Tax benefits on second home

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2011 I currently am working in Delhi. I had purhcased a house in Chennai ( my native place ) in 2008. I have given the house on rent and my income tax deduction is basis the let out property wherein i show the rent as an income ( post deducting the std 30% maintenance charge + municipal taxes) and the complete interest on the loan as expense.

I am thinking of purchasing another property for which i will take a home loan. I wanted to understand the Income Tax benefits on the two scenarios

1. If i purchase the property in Delhi outskirts and leave it out on rent ( As i cannot shift there because my work place is far off from the place i am looking for the property) - Can i claim it as a let out propery and claim the complete interest payment post deducting the rental income as tax deductible or will it be considered as Self occupied even though it has been given on rent ? Pls note i am currently availing HRA as i am staying in a rented accomodation in Delhi . How will the HRA be considered?

2. If I purchase a property in Chennai and i let that out on rent ( which I will have to), will i get the same benefit as my first home loan wherein i show the interest payment as expense and the rent i receive as rental income...

Which option is better from tax benefit perspective

Pls clarify as I am not able to get a clear answer from any one

Rgds
RD

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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10 August 2011 Q 1. If i purchase the property in Delhi outskirts -

You can get the same treatment done for Delhi property as like Chennai property.
.
If you do not want to occupy any of the houses, and showing properly the rental income, the department does not take any objection on the ground that your interest claim exceeds 1.50 lacs as the property is let out.
It is not so that one house will be deemed as self occupied by the department. It is an option to the assessee to treat any of the houses as SOP.
Also there is no provision in the law that
suggests that HRA can not be availed by the assesee who is dwelling in rental accommodation due to his employment or place of work. Since your own house is let out and not suitable for your Job, you may not occupy that.

SO AVAIL HRA AND HOUSING LOAN INTEREST BOTH.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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10 August 2011 1. If you can purchase house in Delhi you can avail interest deduction fully if you treat as let out. incase you want to claim self occupied then you can claim interest subject to max. Rs.1.50 lakh. such as case your HRA fully taxable

2.In case you are purchase house at Chennai the you can take self occupied as per section 23 (2)(b)

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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10 August 2011 2. If I purchase a property in Chennai and i let that out on rent...

YES YOU WILL GET THE SAME BENEFITS in respect of any number of houses as you can purchase on loan.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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10 August 2011 Which option is better from tax benefit perspective.

Taxes and benefits are equally available.
Now choice is yours-Decide

-Whether you want to go in Lok-Sabha or
in Assembly?

If you desire to go in Lok Sabha-
do not purchase a House in Delhi or in its outskirts.
.
Basically except you, no one can be a
better judge in this matter.

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