4. Additional Benefits

If you keep your second home on rent for a period greater than 300 days, it will be exempted from wealth tax. However, if you sell any of the houses after 3 years, the profit will be treated as long-term capital gains and will be taxable. But if you invest the profit earned to build a house within 3 years or use it to buy another house within 2years, the income will be exempted from tax.

However, this does not apply if the new property is sold within 3 years from the time it was bought or built. It will be treated as a short-term gain and taxed according to the tax slab you belong to. Still, you can save on taxes if you invest this profit in a bank scheme allotted for capital gains. You can also save on taxes if you invest up to 50 lakh in bonds, which can be redeemed after 3 years. However, you must do this within 6 months of the sale of the property.