The RBI Governorâ€™s consistent raise in interest rates or Repo rates affected instantly home loan segment. But his recent cut had its equal positive impact too, opening newer venues.
The financial analysts claim that taking a second home loan for renting purpose is the best idea in the give situations. They argue that if a home loan taken for a self-occupied property, the principal amount repaid up to Rs 1 lakh qualifies for deduction under Section 80C, while up to Rs 1.5 lakh of interest paid is tax deductible under Section 24. But in case of a home loan for the second property, only interest payment is eligible for deduction. No tax benefit is available on the principal repayment on the second loan. But here the beneficial point is that there is no limit on the deduction for interest payment on the second loan. This predominantly is because the second house taken is given on rents.
On the whole the issue of a second home also acts as a saving for the future. Land appreciation helps one along with the tax benefits promoting the prospective buyer to go in for a second loan. However keeping your records clean plays a vital role in managing another loan. (With inputs from internet- AarKay)