Suppose you bought a house a few years ago and are already in the process of finishing the home loan. At times people buy a house that is far away from the city in the prospect of settling in the place once it is properly inhabited. The idea of buying a second house may not strike to you as an ideal one but if you look at the various tax benefits you receive, it is by far a much better investment that is sure to give you returns.

Getting finance for a second home is also not that difficult. Many banks easily offer finance based on the previous repayment history of home loan borrowers. The best part is that you can easily rent out the first or second home and easily manage the additional home loan EMI that you will be paying towards the second home loan.

So, what are the tax exemptions that you receive on a second home? Well, you may be well aware that the tax benefits on a first home are applicable for upto one lakh on the principal amount you pay every year and upto Rs. 1.5 lakh on the interest you pay towards your home loan every year. This is as per the deductions under Section 80C of the Income Tax Act of 1961. Now, when you buy a second home, you will be eligible for tax deductions on the interest payments and not the principal amount. However, unlike the first home, there is no cap towards the amount you can qualify. So, even if you are paying around Rs. 4 lakhs every year towards the interest on the second home; you will qualify for the tax exemption for the entire amount. This is a huge tax benefit for second home-owners as unlike the first home owners, you do not have an upper cap limit of Rs. 1.5 lakhs.

If the second home that you purchase is still under construction, you are eligible for 20% of the interest you pay towards the home loan for upto a period of five years. If you purchase a second home and do not put it on lease, you will be taxed on a deemed property rent that is a notional amount based on the possible rent you would have got if you rented it out. However, you become eligible for a 30% deduction for any maintenance on the second home that you can claim for tax benefits. If you let out your second home on a lease, there will be tax deductions on the rent that you receive.

Letzbank has one of the best home loan products from all leading banks that are provided to you in a comparative display, all at one page. You can search for the best home loan deals that are exclusive to Letzbank customers, which are provided through Letzbank’s tie-ups with different banks. Get Instant Quotes too from a choice of your bank and instantly check your home loan eligibility online as well as determine the home loan EMI by using Letzbank’s Home Loan EMI calculator. What’s more, you can get the service charge waived off for your home loan application if you submit it directly at Letzbank’s website.

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