Second Home loan

POSTED BY Rajaram ON April 28, 2011 6:32 pm COMMENTS (3)


Recently I purchased a new home which is under construction. Currently I am staying in old house for which I had taken loan but cleared total loan last Financial year 2010-11.

For new house I have taken a fresh loan of 30 Lacs from LIC housing finance and EMIs already started.

I have to submit a declaration for Income tax for year 2011-12. Please let me know how much amount I can claim and under what section.


Raju Khose





3 replies on this article “Second Home loan”


    My questions which are a mix from different subjects and would appreciate if we can get the answers to the benefit of all

    1. I presently stay in Mumbai in my parents house on rent. I have my own property in pune which is taken without a loan and currently unoccupied and used for holidays by my parents and self. I hv taken a new property in Mumbai which is underconstruction and will take 2-3 more years for completion. Can I get the tax benefit against my salary income for more than the 1.5L interest paid out every year for this second home? I hope this does not have to be my second home loan and only for the second home. Please clarify.

    2. Do I get the above tax benefit for the pre-emi period which is usually 18M or do I have to start with EMI from the beginning?

    3. Is SBI MaxGain Loan treated differently in any way from tax benefits point of view? Do we get the same tax exemptions on the interest paid out during pre-emi and also emi? I hope the IT folks do not treat it different and we lose out on the benefit of tax benefits.

    4. I understand that for underconstruction property the interest paid out before occupancy can be accumulated and spread over 5 years of so.. Can you please explain in my context assuming my loan starts from June 2012 and possession in June 2014.

    5. I understand that if the property is sold within 3 years then the interest paid tax benefits are all reversed and income is treated in short term gains. Now the key question is when is the 3 years calculated from – is it from the date of first signing amount to the builder or date of signing the agreement or date of possession or some other milestone? If my date of signing up the first token amount to the builder was on 8th June 2011, the agreement was registered on 8th June 2012 and the possession is on 8th June 2014, then when will the 3 years be considered as complete and taken in long term capital gains?

    6. After say 3 years from the date finally appropriate for the above, can I invest the entire funds with profits received from the sale proceeds of the flat into a new house (in less than 2 years) without paying any tax?

  2. Asif says:

    While the above answer by jagdees stands true , some point needs to be added.

    1. since the second home is under construction you can not claim deduction on it until possession.

    2. when possesion completed you need to show one house as rental and add the rental income to your income then take full deduction on the interest paid for second home loan. it is then not limited to 1.5Lacs

  3. Jagadees says:


    If you have already bought first home where you are living right now and want to buy another house, you can claim full interest paid for the EMIs of second house. As per tax laws, you can claim full deductions for the amount paid as interest on loan for second house. For the first house you can claim up to 1.5 lacs in interest, however for your second house you can claim full amount of interest without any upper limit.


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