Some of the primary factors that must be kept in mind while purchasing more than one properties are that either one of the two properties will be self-occupied while the other will remain rented. Both properties will have separate tax treatments!
Buying a second home can be a choice many people make as it can be an investment. A farmhouse or a holiday home for you to relax and unwind. Even an option, for an individual to get a regular source of income, in the form of rentals.
With the real estate scenario changing by the minute, with great appreciation in value of the properties, influencing and making many investors take the plunge into buying these homes. This kind of homes generally, have their tax implications for the buyers.
The market value of the properties owned by you will play an important role when it comes to your loan process. Your taxable amount on those properties will be calculated based on the below mentioned scenarios:
Scenario 1:
If you have rented out one of your properties, and this is allowing you to have a regular source of income, the tax for this property will be treated as Income from House property. After paying interests, taxes paid to municipal authorities, any other deductions will be your income.
Scenario 2:
If you are residing in the property or it is unoccupied, then the deduction of tax will be a nominal amount of the rent expected from that property.
For your second home, you can get a tax reduction on a few parameters as mentioned below:
There are pros and cons to owning a second home or property, but you may also want to consider the possibility of paying wealth tax.
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