Of co-borrowers and second homes

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: Wribhu Tyagi, Microfinancial Services Ltd (deal4loans.com)

If a customer is taking a second home loan then is he eligible for tax rebate on the same?

A person may have any number of houses. He/she may claim one of those houses as self-occupied (from amongst the houses other than actually rented), and he/she will be eligible for a claim of interest rebate upto Rs 1.5 lakh on that house on such self-occupied or deemed to be self-occupied house. The remaining houses will be treated as rented (if not actually rented, then deemed to be rented) and in such cases the person will be allowed any amount of interest paid as deduction from his/her rental income. The important things are, while computing Income under house property, computation of income from each house will be done separately. The total income from all houses including the loss from self-occupied house will be clubbed together.

How many co-borrowers can an applicant include to avail of a home loan?

There is no limit to co-borrowers, but typically they need to be either blood-relatives of the applicant or co-owners of the said property.

What are the tax implications if an individual sells his home within the same year of purchase? Does the tax implication change after this period? If yes, let me know.

If a person was to buy a house on a loan and if he/she sells the house in less than three years, then the person is eligible to get the interest deduction provided the property was ready for possession — as the interest deduction is allowed only if the property is constructed.

In such a case the person will incur either short-term capital gains (STCG) or short term capital loss (STCL). Registration charges and broker expenses are allowed as part of cost and can also be reduced from the sale price for sale commission.

On short term capital gain, the tax is 30% (plus surcharge, if applicable). STCG can be set off from any other short term or long term capital gain in the same financial year. If the STCL is not fully or partially adjusted in the same year in which the property is sold, STCL can be carried forward till next eight years and set-off can be claimed against Capital Gains in those years.