Can I claim income tax benefit on second home loan?
I have taken a housing loan from our Employee’s Co-operative Credit Society of ₹5 lakh. I have taken an additional 15 lakh home loanfrom a bank for the same property. Will I be able to claim tax benefits on both home loans?
Deduction under Section 80C for principal repayment of the home loan is available only if the home loan is taken from specified entities like the Central or state government, any bank including cooperative bank, LIC, National housing bank, any housing finance company, any cooperative society engaged in providing loans for financing the construction of the house, your employer which is a public company or public sector company or any university, etc.
In your case, the deduction under Section 80 C for repayment made to the bank will be available to you but for the repayment made to your employee credit cooperative society, you will not be able to claim this deduction.
As far as payment of interest is concerned there is no such restriction as to the entity from whom the money should be borrowed and even you can claim a deduction for interest paid to friends and relatives for money borrowed for this purpose. So you will be able to claim a deduction for interest payable under Section 24(b) for both loans up to ₹2 lakh in case the property is self-occupied. If the house property is let out, you can claim full interest against the rental income but loss under the house property head can be set off against other income only up to ₹2 lakh during the same year and the unabsorbed loss shall have to be carried forward for set off against house property income in next eight years.
The benefit of the deduction for interest and repayment of home loans is available only if you opt for the old tax regime. If
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