HomeMoney & FinanceCan home loan tax benefit be claimed for self-occupied and let-out properties?

Can home loan tax benefit be claimed for self-occupied and let-out properties?


I have taken home loan for two properties. One is occupied by myself and the second one is given on rent. As I understand that I can claim interest benefit of 2 lakhs on each house separately. Is my understanding correct? 

Your understanding that one is allowed to claim only two lakh of interest during the year in respect of self-occupied as well as let out is partially incorrect. There are different rules for deduction in respect of interest paid on money home loan for self-occupied properties as well as which are let out. A person is allowed to have maximum of two house properties as self-occupied. In case one occupies more than two house properties for self-occupation, he has to choose any two properties as self-occupied and the rest of the properties are treated as if they have been let out. In respect of such deemed to have been let out properties you have to offer notional rent at market rate for taxation. In respect of all the self-occupied properties treated as such you are allowed to claim deduction of upto Rs. Two lakhs in aggregate every year. For let out property including the self-occupied one and which is treated as let out you can claim full interest against your rental income. 

However, there is a ceiling of two lakh rupees of loss computed under the Income from house property head for all the properties taken together whether self-occupied or let out which you can set off against your other income during the same year. Any loss in excess of two lakh rupees which cannot be set off during the current year against other income is allowed to be carried forward. Such brought forward loss can be set off against taxable income under the house property head in the next eight years. 

Balwant Jain is a tax and investment expert and can be reached on jainabalwant@ gmail.com and @jainbalwant on Twitter



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