2. Deductions Allowed on Income from Second Home

The IT Department will consider your second house to have rental value, even if it’s unoccupied. So, the notional or deemed income will get included in your taxable income.

Sonu Iyer, Tax Partner at Ernst & Young, says, "A buyer can deduct expenses, such as municipal or property taxes actually paid, from the deemed income. Other than this, 30 percent of the net annual value, which is the difference between the rental income and municipal taxes, is also allowed as deduction. In case the house is rented out, 30 percent of the actual rent can be deducted from the taxable income, apart from deductions for local and municipal taxes."