Myth: Deduction in respect of payment of interest and repayment of housing loan is available only on one house.
It is not true. Most taxpayers generally believe that the deduction on interest and repayment of housing loan is available on one house only. But in actual, an individual can have more than one housing loan.
In case an individual has more than one house, then one will be treated as self-occupied and others will be treated as deemed to be let out property. For self-occupied property, the interest paid on housing loan will be eligible for deduction maximum upto Rs. 2,00,000 p.a. from AY 2015-16 and before that it was Rs 150,000/- (AY 2014-15) subject to certain conditions. However, in case of deemed let out property, there is no such restriction, the whole amount of interest paid shall be allowed as deduction under section 24(b) of Income from House property.
The individual is also eligible to claim deduction u/s 80C of the Income Tax Act, 1961 for the repayment of principal amount on housing loan. Principal can be claimed up to the maximum of Rs. 150,000 under Section 80C for AY 2015-16 and for AY 2014-15 it will be Rs 100,000/-. This is subject to the maximum level of Rs 150,000 (AY 2014-15 Rs 100,000/-) across all 80C investments. You will need to show the statement provided by the lender showing the repayment for the year as well as the interest & principal components of the same.
Hence, if there are two housing loans, then interest paid on both houses can be taken as deduction u/s 24 of Income from House Property. However the total amount that you will be entitled for repayment of house loan under section 80C would be total of Rs.1,50,000 for AY 2015-16 (FOR AY 2014-15 Rs 100,000/-) across both the homes.