If a person is paying EMIs for two home loans(on two different residential properties in the same title), then his eligibility for getting tax rebate, would be that on the EMI of only one or both the home loans??? What does our Indian Income tax law says in this situation? Any answers ...?
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  • Hope you find your answer here!!!!!!!

    Hi Vaddy,

    Your question is very genuine considering the conditions in applicability of the Tax Laws in our India..After reading your query, I simply thought of searching something for the same over the internet.Luckily I found a very informative artice, somewhat related to your query only :) , published in Financial Espress. Here is what expert says in this matter -

    If you have two houses, only one of them will be treated as self-occupied and the other will be as deemed let out. On commercial properties and on houses given on rent, there is no limit on the deduction for interest paid or payable on housing loans.
    Sec 80C covers payment by an individual or HUF for purchase or construction (not repair, renewal or reconstruction) of only a residential house (not necessarily self-occupied) the income from which is chargeable under ‘income from house property’, in respect of installment or part payment towards cost of house property allotted to him due under

    (i) any self-financing or other schemes of any development authority, housing board or other similar authority engaged in the construction and sale of house property on ownership basis or

    (ii) any company or co-operative society of which the assessee is a shareholder or member.

    One more point. Even if two loans are taken for the same flat, the total benefit can be claimed on both the loans as long as both the loans are for acquisition or construction.

    Suppose an assessee has taken a flat through a housing loan and is claiming deduction on interest and also on repayment of loan. Subsequently, he takes a second flat and also takes a loan for its purchase. This second house will be treated as let out or deemed let out. The entire interest payable without any ceiling is deductible against the income from it. Even if he does not let it out, the annual value of the flat will be treated as income for income-tax purposes.


    Few more queries which are most of the times attract concentration has been discussed in this article. I would like to share the article wid you all dear members :)

    Sec 80C covers payment of only a residential house

    There is a difficulty in filling the OS Schedule of Form No ITR-2. By totaling Column-1 (a to f) my total (1g) is, say, Rs X. The amount in Column-2 is nil. Column-3 is (1g + 2) and is therefore Rs X. Column-5, (1g+2+3+4c), will then become 2X. Surely, this total should be X. I am also getting family pension and deduction u/s 57 (iia). How can I show and claim deduction in ITR 2?


    Ans: Yes, you are absolutely right. There is a mistake in the form. The total should have been either of (1g+2+4c) or (3+4c). In fact, inclusion of ‘3’ was unnecessary.

    Then again, the taxable salary is arrived at by subtracting from the gross, professional tax. In the case of family pension, which comes under the head ‘Salaries’, Sec 57(iia) grants a deduction of 331/3% with a ceiling of Rs 15,000. Both these items have no place in the ITR-2 form.

    Yes, the assessee can do well by ignoring inclusion of item ‘3’ and also show the net figure of salary after taking into account these two deductions. We shall point out these deficiencies to the CBDT to enable them take corrective action while printing the forms for the next year.

    We thank you for your diligence.

    Are EMIs for two home loans eligible for tax rebate, considering both flats are in my name? My office insists that the tax rebate can be claimed for only one EMI.



    If you have two houses, only one of them will be treated as self-occupied and the other will be as deemed let out. On commercial properties and on houses given on rent, there is no limit on the deduction for interest paid or payable on housing loans.

    Sec 80C covers payment by an individual or HUF for purchase or construction (not repair, renewal or reconstruction) of only a residential house (not necessarily self-occupied) the income from which is chargeable under ‘income from house property’, in respect of installment or part payment towards cost of house property allotted to him due under

    (i) any self-financing or other schemes of any development authority, housing board or other similar authority engaged in the construction and sale of house property on ownership basis or

    (ii) any company or co-operative society of which the assessee is a shareholder or member.

    One more point. Even if two loans are taken for the same flat, the total benefit can be claimed on both the loans as long as both the loans are for acquisition or construction.

    Suppose an assessee has taken a flat through a housing loan and is claiming deduction on interest and also on repayment of loan. Subsequently, he takes a second flat and also takes a loan for its purchase. This second house will be treated as let out or deemed let out. The entire interest payable without any ceiling is deductible against the income from it. Even if he does not let it out, the annual value of the flat will be treated as income for income-tax purposes.

    1. My husband has inherited an ancestral residential property (gifted by a relative), by way of a will. Though this relative expired in 1986, the property is several generations old. If my husband sells this property, will he be liable to pay long term capital gain tax? If yes, what would the calculations be based on?

    2. Assuming that I buy a new, under-construction property using the LTCG fund under the Capital Gains Account Scheme - the tentative possession date, while being June 2009, the registration of this under-construction property has happened in June 2007 itself. There is a three-year lock-in for the sale of the property. So, will the lock-in period end in June 2010 or June 2012?




    Ans: 1. In the case of gifted or inherited property, for computing long-term capital gains arising out of the subsequent sale by the donee or the legatee, the cost of the property is the cost incurred by the donor when he originally acquired it, or the fair market value (FMV) as on April 1,1981 as assessed by an official chartered valuer, whichever is higher. If the donor himself has acquired the property through a gift or inheritance, the cost of acquisition is the cost to the original holder (or FMV as on April 1,1981) who has originally purchased it.

    Explanation ‘iii’ to Sec 48, defines ‘indexed cost of acquisition’ to mean an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on April 1, 1981, whichever is later.

    This means that in the case of an inherited or gifted property, the cost of acquisition is the cost to the original holder (or FMV as on April 1,1981) but the date of acquisition for indexing should be taken as the date of the inheritance or the gift.

    However, the character of long or short-term depends upon the date of acquisition of the original holder. In case this original holder has also acquired the property by way of a gift or inheritance then it will be the date of the very first holder who purchased or constructed the property.

    2. The new residential house acquired for the purpose of claiming exemption u/s 54 (for residential houses) or 54F (for other assets) has a lock-in of 3 years. The clock starts from the date of acquiring the new house. If a house is under construction, the same is not a full-fledged house yet. The construction should be complete, the flat should be ready for occupation and the municipal annual value known.
    Source: The Financial Express
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