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New Homeowner: Investing in Second Property - Tax Implications, Benefits, and Pitfalls

Vipul Bhavsar |7 Answers |Ask -Follow

Tax Expert - Answered on Feb 14, 2025

Vipul Bhavsar is a chartered accountant from The Institute of Chartered Accountants of India. He has over 16 years of experience in corporate advisory, taxation and financial reporting.
His interest areas are consulting, income tax, GST and due diligence.
He founded his CA firm, V J Bhavsar and Associates, in 2010 through which he offers services like virtual CFO, trademark registrations, company /LLP formation, MIS reporting, audit, tax and TDS compliances, accounts receivable/payable management and payroll processing.... more

Asked by Anonymous - Feb 11, 2025Hindi

Money

My husband and I recently bought our first home and are now considering purchasing a second property as an investment. We’re unsure about the tax implications of owning multiple properties. What deductions can we claim on the second home loan, and how is rental income taxed? Are there any benefits or pitfalls we should be aware of when it comes to capital gains if we sell in the future? Would old tax regime work better for us?

Ans: Hello Madam,
1. Assuming New property being held for investment shall be Rented out, the Home loan interest is allowed as deduction from rental income. Rental income after reducing Home Loan interest, if any of this property shall be added to your existing income eg. salary/business. This can be done only if Old Scheme of Taxation is adopted.
2. If sold, Capital gain shall be applicable and exemption under 54, 54 F, 54EC etc may be claimed.

It is advised to consult a CA as there are different scenarios which shall be required to be considered like your existing income, Tax liability comparison between old and new regime, your future planning etc

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Hello Sir, could you please help me understand? If I sell a property, can I split the money and invest in more than one property within 3 years of the sale and avoid paying tax?

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My son has got 91 percentile in the recent jee exam , he has next attempt in april, but i feel its difficult for him , can i know about other good colleges in karnataka , as im based their. interested in computer science and aeronautical degree, also advise some recent good courses for his career in india.

Ans: Hello Manoj.
Do not get stressed at this stage. Even though his score is 91 percentile in 1st attempt, he can do well in 2nd attempt. But from the safer side, ask him to appear in the Karnataka State Engineering Entrance Examination also. Even if he scores less in JEE on 2nd attempt, he may good college via the state entrance examination in CSE or aeronautical engineering as per your wish. For your reference, there are 10 colleges in India where you can get admission without a JEE score. To know more details, please copy and paste the following link into your browser- https://timesofindia.indiatimes.com/education/news/10-engineering-colleges-in-india-for-pursuing-btech-without-jee-main-2025-score/articleshow/118162587.cms.
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Ans: I don't know the amount you want to invest.
If the amount is reasonable & you can find suitable Real Estate option, that will be best. Invest in that property, which yields you some returns and is likely to appreciate with the passage of time. It should be readily Salable also, so that the proposal ensures liquidity also.
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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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