Tax treatment for second home loan

If you have not let out the second home, the second home will be considered as deemed to be let out. You may claim principal amount u/s 80C upto 100,000/- and interest u/s 24 upto Rs. 150,000/-. If you let out the second home, you may claim actual interest paid. You should file ITR-2.

To get deduction u/s.80C for Principal repayment of Loan, Construction of House should be completed. In your case as Construction has completed in 2013-14, You can take repayment of Housing loan u/s.80C for A.Y 2014-15 up to Maximum of Rs.1Lakh (provided no other deduction u/s.80C has claimed). Secondly, as Mihir said You need to offer one of your two houses as Deemed let out property and offer such deemed rental Income under the head Income from House property. Interest paid on Loan taken for second house in 2013-14 can be claimed fully in the year it self but Interest paid from 2011-31st March,2013 is regarded as Prior Period Interest and 1/5 of the above to be claimed in 2013-14. It should be noted that if you select second house as Self occupied property, Interest deduction shall be limited to 1,50,000 for A.Y 2014-15. You should be liable to pay wealth tax if your Net wealth exceeds 30Lakhs. There is valuation technique for determination of House property Value. If Value of these two properties exceed 30Lakhs,then you will be liable to pay wealth tax @ 1% on Net wealth-30Lakhs. Such Net wealth to be determined after deducting value of any one of these two properties at your discretion. (because You will be entitled to exemption of one house property value for determination of Net wealth). You need to file ITR 2 but not ITR 1 as you are liable to offer Deemed rent under the Head Income from House property. ITR 1 is for Individuals having Income from salary and Interest only.