Tweet
2nd Home loan tax benefit
As of now I am having a home loan running for a flat in my hometown (A). My parents stay there and am claiming tax benefit of 2 lac (as per current budget policy) for the same since past 3 yrs.
Recently I have booked a new under construction property (B) in the place where I work (different state from my hometown) and thus have availed a 2nd home loan. Am going to get the possession of the same in another 2-3 months (construction period is 3 years: 1 year I paid pre-EMI and thereafter I started paying the EMI).
Please make a note that my 1st flat (A) is not that expensive but my second flat (B) is very expensive.
Looking into all these I have still not decided to rent my new flat (B) or to stay in it provided my parents will continue to stay in my 1st flat (A) in hometown.
I am aware that if there are two home loans, we get tax benefit for the entire interest we pay for the second home loan.
To get the maximum tax benefit I am considering all the possible ways:
1) If I stay in my new flat (B) purchased from the 2nd home loan then I can show only 2 lac (as per current budget policy) for tax benefit (and I cannot claim HRA) for the 2nd home loan and tax exemption on full interest component of my 1st flat(A).
==> This doesn't help me avail maximum benefit.
2) If I stay in a rented flat in the same city where my new flat (B) is, then I can show entire interest paid for the second home loan provided I will show a nominal rent earned from renting my 2nd flat (B) as income earned, having said that my first flat (A) is occupied by my parents in my hometown.
==> If this is the case then at the same time can I claim HRA as well since am still staying in a rented flat ?
Please suggest me if there is any other better way to avail maximum benefit.
Apart from this I have one more query:
I understand that exemption is not allowed on interest paid till we get possession. I also understand that interest on these pre possession EMI’s can be accumulated and spread over 5 years and can be claimed for exemption after the possession (each year 20%).
• What is the procedure of claiming this 20% each year after possession? I mean do we have to add this 20% accumulated interest of pre-possession EMI to the current year's total interest for the EMI paid (keeping in mind this am claiming for my 2nd home loan).
• Is there a cap on claiming this 20% of the accumulated interest of pre-possession EMI ? I mean because if it were the case of 1st home loan then the cap is 2 lacs (as per current budget policy) which includes both the actual total interest for that year + 20% of the accumulated interest of pre-possession EMI, anything beyond this can't be claimed, which at times makes this 20% un-claimable because the interest component of that year itself is more than 2 lacs. So, in my case since it is the 2nd home loan, therefore, I assume there is no cap on the total interest to be claimed for tax exemption which means I can claim for both the interest of EMI for the complete year post possession + 20% of the accumulated interest of pre-possession EMI.
Please advise me if I am correct in my assumptions and understandings to help me claim maximum tax benefit in my scenario.
Thanks..!!
Recently I have booked a new under construction property (B) in the place where I work (different state from my hometown) and thus have availed a 2nd home loan. Am going to get the possession of the same in another 2-3 months (construction period is 3 years: 1 year I paid pre-EMI and thereafter I started paying the EMI).
Please make a note that my 1st flat (A) is not that expensive but my second flat (B) is very expensive.
Looking into all these I have still not decided to rent my new flat (B) or to stay in it provided my parents will continue to stay in my 1st flat (A) in hometown.
I am aware that if there are two home loans, we get tax benefit for the entire interest we pay for the second home loan.
To get the maximum tax benefit I am considering all the possible ways:
1) If I stay in my new flat (B) purchased from the 2nd home loan then I can show only 2 lac (as per current budget policy) for tax benefit (and I cannot claim HRA) for the 2nd home loan and tax exemption on full interest component of my 1st flat(A).
==> This doesn't help me avail maximum benefit.
2) If I stay in a rented flat in the same city where my new flat (B) is, then I can show entire interest paid for the second home loan provided I will show a nominal rent earned from renting my 2nd flat (B) as income earned, having said that my first flat (A) is occupied by my parents in my hometown.
==> If this is the case then at the same time can I claim HRA as well since am still staying in a rented flat ?
Please suggest me if there is any other better way to avail maximum benefit.
Apart from this I have one more query:
I understand that exemption is not allowed on interest paid till we get possession. I also understand that interest on these pre possession EMI’s can be accumulated and spread over 5 years and can be claimed for exemption after the possession (each year 20%).
• What is the procedure of claiming this 20% each year after possession? I mean do we have to add this 20% accumulated interest of pre-possession EMI to the current year's total interest for the EMI paid (keeping in mind this am claiming for my 2nd home loan).
• Is there a cap on claiming this 20% of the accumulated interest of pre-possession EMI ? I mean because if it were the case of 1st home loan then the cap is 2 lacs (as per current budget policy) which includes both the actual total interest for that year + 20% of the accumulated interest of pre-possession EMI, anything beyond this can't be claimed, which at times makes this 20% un-claimable because the interest component of that year itself is more than 2 lacs. So, in my case since it is the 2nd home loan, therefore, I assume there is no cap on the total interest to be claimed for tax exemption which means I can claim for both the interest of EMI for the complete year post possession + 20% of the accumulated interest of pre-possession EMI.
Please advise me if I am correct in my assumptions and understandings to help me claim maximum tax benefit in my scenario.
Thanks..!!
Comment