G
Ganesh Hegde
posted on 18 MaySecond home loan tax benefits: Is 'deemed let out' the real game-changer?
Most people don't fully use the Section 24 tax benefits for their second home loan. I'm in a 2BHK in Whitefield, planning to upgrade to a 3BHK in Sarjapur Road. Already have a loan. Heard you can claim interest on *both* properties if one is 'deemed let out'. Is this sahi hai? Premium for 3BHK is huge, so savings matter. Other deduction hacks? Hope this helps someone.
#tax-benefits#home-loan#second-property#sarjapur-road#whitefield
Comments
It's a nuanced topic, definitely not a one-size-fits-all solution. For someone upgrading from Whitefield to Sarjapur Road, with the current market conditions in Bengaluru, property appreciation might still make the investment worthwhile despite the complexities of 'deemed let out'. The key is meticulous record-keeping and a good CA. Don't forget other deductions like Section 80C for principal repayment. Also, consider the future rental potential of your old property; if you plan to eventually rent it out, then 'deemed let out' can be a bridge. What did you finally decide, OP?
So, if the interest deduction is 'unlimited' for deemed let out, does it mean I can claim the full interest paid on *both* properties without any cap, as long as one is declared as 'deemed let out'? And how do you even calculate this 'notional rent' – do I just pick a number, or is there a specific method based on property type and locality? This is where it gets confusing for me.
Ah, that clarifies a bit, U10. So it's not 'unlimited for both' but 'unlimited for the deemed let out one, and 2L for the self-occupied one'. Got it. That still sounds like a significant saving for someone with a high EMI like the original poster.
U4, no, it's not unlimited for *both* together without a cap. The 2 lakh limit applies to *each* self-occupied property. If you have two loans and declare one as 'deemed let out', then for *that* deemed let out property, you can claim the *full* interest paid under Section 24(b). For your *self-occupied* property, the cap of 2 lakhs still applies. So you get full for one, and up to 2 lakhs for the other. As for notional rent, you should ideally check rental listings for similar properties in your area (like Whitefield for the original poster's 2BHK) to arrive at a fair market value. Your CA will help you document this properly.
My personal experience with 'deemed let out' was a mixed bag but ultimately helpful. I bought a second home in Agrahara Layout two years ago and kept my first one vacant for a few months before finding a tenant. For those vacant months, my CA advised me to declare a reasonable market rent as 'notional rent'. The biggest benefit comes from the Section 24 interest deduction, which is capped at 2 lakhs for self-occupied properties but unlimited for let-out/deemed let-out ones. This unlimited deduction is the real kicker if your loan interest is high. Just make sure your declared notional rent is justifiable; the taxman can question it.
Be very careful with 'deemed let out' guys. It's not a free pass. The income tax department expects you to declare a *notional rent* from your vacant property, even if it's not actually rented out. This notional rent will be added to your taxable income. While you can claim interest deductions, sometimes the notional income can offset a significant portion of the benefit. Consult a CA, don't just rely on hearsay.
U2 is right. I explored this option last year for my flat in Adigara Kallahalli. My CA explained the notional rent part, and honestly, after crunching numbers, the net benefit wasn't as huge as I initially thought. It depends a lot on your income bracket and the interest amount. It's not a 'game-changer' for everyone.
Exactly! My friend got into trouble because he didn't declare anything for his 'deemed let out' property for two years. Income Tax notice aa gaya tha. It's not a loophole, it's a specific provision with rules.
Wow, this is exactly what I needed to hear! I'm also planning to upgrade from a 1BHK to a 2BHK in Akshayanagar and was worried about the existing loan. So, the 'deemed let out' concept means I don't actually have to rent out my first property to claim benefits on both? That would be a huge relief for my EMI burden. Any specific clauses or conditions to be aware of, especially for first-time buyers like us?
Haan, U1, the question is important. Mera tax advisor bola tha ki it's not that straightforward. There are some catches, especially regarding the notional rent calculations. Don't jump in without understanding the fine print.
Same boat, bhai! I'm looking at properties near Aavalahalli and the prices are making me sweat. If this 'deemed let out' is legit, it could really make a difference. Hope someone can confirm this with proper details.