I bought my first house in Navi Mumbai in 2013 with a home loan from SBI. The outstanding loan amount is Rs 23 lakh, and the EMI is Rs 23,723. I stayed in this house for the last nine years, and it has been let out since last year as I have moved to another city for a job.
I booked an under-construction house in Panvel in 2022, which will be ready for possession in December 2025. The sanctioned loan amount from HDFC is Rs 49 lakhs, and the current pre-EMI is Rs 28,000, which will increase to Rs 44,000 upon possession. This house will be rented out at Rs 25,000 per month once possession is taken.
Now, I am planning to buy a third house in Ahmedabad. The home loan required for this house is Rs 64 lakhs, and the EMI will be around Rs 55,000 per month.
My current age is 43 years, and my take-home salary is Rs. 1.88 lakhs per month after all deductions. I have put my first home up for sale and intend to close the first home loan within this financial year, also reducing the third loan outstanding by half. Could you please guide me on whether I can get the third home loan and what my tax calculations for FY 24-25 would look like?
Reply by: Balwant Jain, a tax and investment expert
As far as your eligibility for a third home loan is concerned, lenders normally consider 40-45% of your take-home salary as available for servicing the home loan. Accordingly, you can service an EMI of around Rs 80,000 a month. After accounting for your current EMI of Rs 68,000, you are left with only Rs 12,000 to service the third home loan, which broadly entitles you to a home loan of around Rs 12 lakhs. You can add any other earning family member as a co-borrower to enhance your home loan eligibility. The co-borrower need not be a co-owner of the property.
Since you are planning to close the first home loan, which will release around Rs 24,000, this will enhance your home loan eligibility to around Rs 36 lakhs once the first home loan is fully paid off. If your savings are higher due to the rent you receive, you can try to convince the lender to give you a higher home loan.
Regarding taxation, you will be able to claim up to an aggregate of Rs 1.50 lakh under Section 80C towards repayment of all home loans along with other eligible items.
Against your rental income, you will be able to claim the full interest. For a maximum of two self-occupied properties, you can claim an aggregate deduction of Rs 2 lakh. However, during a year, you can claim a loss of a maximum of Rs. 2 lakh under the house property income head against other taxable income, and any loss not set off during the year will be carried forward for set off against your property income for the next eight subsequent years.
(The views and investment tips by investment experts are their own and not that of Business Today. Readers are encouraged to consult a qualified financial advisor or a SEBI-registered investment advisor before making any investment decision)