Interim budget 2019, special announcements were made for people whose two houses were there. The budget proposes that if your second house is vacant, then it will not be covered by the tax. She will also be taken like self-occupied. The new provision will be applicable from 2019-20.
At the time of two houses, the self-occupied property is limited to one home. The second house is assumed to be rented. Taxes on its non-related rent
How Tax Will Change For Owner Of Two Houses
Sahitya Totti Ghosh, in Deloitte India, says that under the Income Tax Act, home loan interest can be claimed as a deduction. The limit of deduction for the self-occupied property is 2 Lakh rupees. Right there In case of rental property, there is no upper limit on the amount of interest as a deduction.
Let’s assume that someone has two houses. These have different home loans.
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A Self Occupied Property. The Second Is On Rent
In case of self-occupied property, a deduction of up to Rs 2 lakh rupees can be claimed on the interest of the house loan. There is no such limit for the rental property. If there are two property losses in the calculation, then you can set off a maximum of 2 lakh rupees from other sources of income. The remaining amount can be carry forward for 8 assessment years.
Both Properties Are Rented
Income from both houses can be claimed as a deduction to the whole interest on home loan. There is no upper limit of interest. although. Upon the loss of two properties in the calculation, the maximum 2 Lakh rupees can be set off from other sources of income. The remaining amount can be carry forward in the 8th year.
As Per The Existing Provision
Only one house will be considered self-occupied. Even if the second property is empty, it will be assumed that he is on rent. Ghosh said that the taxpayer can choose from his own wish that he will take the property as self-occupied. The property from which it can be maximized. She is free to choose her.
According to the amendment in the interim budget
Both houses will be taken as self-occupied and in this case, no nominal income will be considered. A discount of a maximum of 2 Lakh rupees can be availed as a deduction on the total interest of both home loan.
Impact on Your Tax Savings
Partner S. Vasudevan in Lakshmikumaran and Sreedharan attorneys say that the amendment may require taxpayers to pay more taxes. There are two reasons for this. The first one. Limit of deduction on interest of the home loan. Second. The restriction of carry forward in the subsequent years to the total loss caused by two houses.
After the deduction of a new proposal, the deduction of interest will be limited to 2 Lakh Rupees. Also, the taxpayers will not be able to carry the carry Forward In this way, they have to pay more tax.