Homebuyers Can Now Enjoy Tax Benefits on Two Owned Properties

By Zeeshan Qureshi
February 28, 2025

The dream of owning a home has always been a significant milestone for Indians. However, with rising aspirations and improved financial stability, many homebuyers are now considering owning multiple properties. Until recently, tax regulations posed a limitation on the benefits available to homeowners who owned more than one property. But in a major relief to taxpayers, the Indian government revised tax laws, allowing tax exemptions on two self-occupied properties instead of just one.

This change comes as a boon for homebuyers, investors, and those looking to secure their future with real estate assets. In this comprehensive blog, we will delve deep into the tax benefits of owning two properties, eligibility criteria, calculations, and smart strategies to maximize your tax savings.

Also Read:- Home Loan Subsidy 2024-25: Criteria, Benefits, Process & More

Table of Contents

Understanding the Previous Tax Regime on Multiple Properties

Before the amendment, tax laws allowed homeowners to claim benefits on only one self-occupied property under Section 23 and Section 24(b) of the Income Tax Act.

If a person owned more than one property, the second property was considered a deemed let-out property and taxed accordingly.
Even if the second property was not rented out, the owner had to pay notional rent tax based on the property’s fair rental value.
Deductions on home loan interest payments under Section 24(b) were allowed only for one self-occupied property, capping the benefits to INR 2 lakh per year.

This was a major financial burden for families who owned a second home for personal use, such as a vacation home, a property for aging parents, or an additional investment for the future.

The Game-Changer: New Tax Benefit on Two Owned Properties

Recognizing the evolving needs of Indian homeowners, the government announced a key amendment in the Union Budget 2019. Under the new rules:

Homeowners can now claim self-occupied property tax benefits on two properties instead of one.
The concept of notional rent has been scrapped for the second self-occupied property.
Taxpayers can avail a deduction of up to INR 2 lakh on home loan interest payments under Section 24(b) across both properties.

This is a huge relief for homeowners who invest in a second home, whether for lifestyle needs, family security, or as a long-term real estate investment.

Who Can Benefit from This Tax Exemption?

The new tax benefit is a strategic move to ease the financial burden on various categories of homebuyers:

Middle-Class Homebuyers – Many individuals invest in a second property to accommodate growing family needs.
Frequent Relocators – Professionals who frequently move between cities for work can now own homes in multiple locations without tax liability.
Retirement Planners – Many people buy a second home in their hometown or a peaceful location to retire in.
Real Estate Investors – Those looking to build wealth through property investments benefit by reducing tax liabilities on second homes.
Parents & Children – Families purchasing homes for their children or parents can now do so without being taxed on notional rent.

Also Read:- DDA Housing Scheme 2025: Key Details | Registration Online | Price

How to Claim Tax Benefits on Two Self-Occupied Properties?

How to Claim Tax Benefits on Two Self-Occupied Properties

To maximize your tax savings, it’s essential to understand the different sections under which you can claim deductions:

Section 80C – Principal Repayment Deduction

Deduction of up to INR 1.5 lakh on home loan principal repayment.
The benefit is applicable to both properties if purchased with home loans.
The property must not be sold within 5 years to retain the benefit.

Section 24(b) – Interest on Home Loan

Homeowners can claim a maximum deduction of INR 2 lakh on home loan interest payments across both properties.
If the property is rented out, the entire interest paid on the home loan can be deducted.

Section 10(13A) – House Rent Allowance (HRA)

If you own two properties but reside in a third rented house, you can still claim HRA exemptions.

Section 54 & 54F – Capital Gains Tax Exemption

If you sell one property and invest in another, you can avoid capital gains tax under Section 54 and Section 54F.

Key Considerations Before Buying a Second Property for Tax Benefits

While this tax relief is beneficial, consider these factors before purchasing a second home:

Location Matters – Investing in high-growth areas ensures property appreciation.
Loan Repayment Capacity – Ensure you can manage two home loans comfortably.
Tax-Saving Strategies – Structure your home loan wisely to maximize deductions.
Rental Potential – If you don’t intend to live in the second home, ensure it has good rental yield potential.
Stamp Duty & Registration Costs – Factor in additional costs before purchasing.

Also Read:- Can you take a Loan from your Relatives to Buy a Property?

Conclusion

The government’s decision to provide tax benefits on two self-occupied properties is a significant relief for homebuyers and investors. It encourages real estate ownership while reducing the financial strain associated with notional rent taxation.

For those looking to secure a second home, this is an excellent opportunity to maximize tax savings, build long-term wealth, and diversify investments in the real estate market. Whether you’re buying a home for personal use, rental income, or investment, understanding these tax benefits can help you make an informed decision.

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FAQs

Yes, as per the revised tax laws, homeowners can now claim benefits on two self-occupied properties.

You can claim up to INR 2 lakh under Section 24(b) across both properties.

Yes, under Section 80C, you can claim up to INR 1.5 lakh for principal repayment.

No, the notional rent concept has been removed for the second self-occupied property.

Yes, if you live in a rented house, you can still claim HRA exemptions.

The rent received is taxable under income from house property, but you can claim deductions on loan interest.

Yes, both co-owners can claim tax benefits separately if they co-borrow and co-own the property.

No, but the benefit on self-occupied properties is capped at two homes.

Yes, they offer tax benefits, long-term appreciation, and rental income potential.

Yes, NRIs can claim the same benefits as resident taxpayers.

Only if you are a co-owner and co-borrower of the home loan; otherwise, you cannot claim benefits.

Yes, but you can claim exemptions under Section 54/54F if you reinvest the gains in another property.

You can claim deductions only after possession. However, interest paid during construction can be claimed in 5 equal installments post-possession.

Yes, you won’t have home loan deductions, but you’ll still avoid notional rent tax on the second property.

Yes, you must declare both properties while filing your ITR to claim benefits.

Inherited properties are not taxed at the time of inheritance, but rental income or capital gains (if sold) are taxable.

No, you can own properties in different cities and still claim benefits.

You won’t lose all benefits, but the rental income will become taxable under ‘Income from House Property’.

Yes, if you are the owner and borrower, you can claim deductions even if your parents live in the property.

Take a joint loan, choose high-interest loans for maximum deductions, reinvest capital gains smartly, and declare income properly in ITR.