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I OWN a house in Delhi. There are no loans outstanding on this house. I now plan to take a housing loan and purchase a house at Bangalore, which I propose to occupy. I do not intend either to sell the house in Delhi or to let it out. Will it be possible for me to claim the interest on the loan taken for purchasing the house at Bangalore as a deduction and the principal repayment of such loan as qualifying for rebate?

Praveen

Reply

There should be no problem in your claiming the interest on the housing loan as a deduction and also claiming rebate in respect of the principal repayment of the housing loan taken by you for acquiring a second house at Bangalore. The principal repayment up to a maximum of Rs 20,000 will qualify for rebate only if the loan is taken from specified institutions. The interest will qualify for deduction subject to the limits applicable in respect of a self-occupied property.

It may, however, be remembered that a notional value will have to be offered to tax in respect of the house you own at Delhi. This will be so since only one house property can be treated as self-occupied.

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