Explained: The Interim Budget’s Effect on Second-Home Loan Tax Benefits.

Purchasing a home or property is a huge investment; after all, the rising real estate prices in India are no joke. Thus, to counter the increasing prices and help the people to invest in real estate, the interim budget for the financial year 2019 has made some drastic changes in the housing loan segment. On 21st February 2019, the President of India has assented to the finance bill turning it into an act. Thus, before we start talking about the various tax benefits that it brings along with it, let’s discuss the act itself in detail.

Income tax amendment on tax benefits:

Earlier, if you had two properties then you would have to choose one of them as self-occupied and had to select the other one as let-out property. Thus, you would be eligible for taxation only on your self-occupied property and would have to pay notional rent in the form of tax on your let-out property. However, now thanks to the interim budget 2019, you would be eligible for deductions on home loan interest rates for both the properties up to 2 lakh rupees.

Now let us take the example of Suneel and understand this interim budget for home loans in depth:

In the financial year 2018, before the interim budget-

Suneel is a proud owner of two properties since the financial year 2015 and has one of his properties lying vacant. Earlier, in the financial year 2018, he could only opt for tax deductions on the interest rates of his self-occupied property up to 2 lakh rupees; however, at the same time, he had to pay notational rent in the form of tax for this let-out property, even though it was lying vacant. After which, he was eligible to avail deductions on a municipal tax that he had paid, deductions on interest rates, and other standard deductions on his rented-out property. Although, he was provided with the liberty to select his self-occupied property amongst the two he possessed (the one that would fetch him the maximum profits); however, he still had to pay tax for the property which was lying vacant.

In the financial year 2019, after the interim budget-

After the interim budget, in the present year, he has the liberty to choose both of his properties as self-occupied; meaning, he can now avail tax benefits on both of his properties up to 2 lakh rupees. Further, he doesn’t even have to pay off tax for his vacant property. Now the money that he can save from the tax exemption can be utilized to pay a couple of EMIs (equated monthly installments) on his housing loan.

Thus, the above instances show that the new interim budget will be of great help to the people with two housing loans- to avail a certain amount of tax benefits. Meaning, you can make use of this amount to fulfill your other financial commitments. Therefore, the interim budget for the financial year 2019 has had an extremely good impact on the home loan segment in India.