There is no general legal restriction in India on the number of residential properties a person can own. Similarly, banking regulations do not prescribe a fixed limit on the number of an individual can take. A person can also claim eligible tax benefits on multiple home loans, subject to the applicable conditions and limits under the Income Tax Act.
However, tax rules do place restrictions on how many properties can be treated as self-occupied and on the amount of loss from house property that can be adjusted against other income in a financial year.
Multiple home loans depend on repayment capacity
An individual can take multiple as long as the lender is satisfied with the borrower’s income, credit profile and ability to service the loans. There is no blanket rule limiting the number of home loans a person can have.
Under the old tax regime, the deduction for interest paid on loans for self-occupied properties is subject to an overall limit of ₹2 lakh per year. The limit applies to the combined interest deduction for all eligible self-occupied properties.
For properties that are let out, or are treated as deemed let-out properties when more than two houses are classified as self-occupied, the actual interest paid can generally be claimed as a deduction while calculating income from house property.
House property loss has a separate set-off limit
Even when the interest deduction results in a loss under the head “Income from house property”, there is a limit on how much of that loss can be set off against income under other heads in the same year.
Under the old tax regime, the amount that can be set off against other income is restricted to ₹2 lakh in a financial year. Any remaining loss can be carried forward for up to eight years and adjusted against income from house property in subsequent years, subject to the applicable rules.
Principal repayment deduction is capped
The tax benefit on repayment of home-loan principal is also subject to a limit. Under the old tax regime, principal repayment can qualify for deduction under Section 80C, along with other eligible investments and payments.
The combined deduction under Section 80C is capped at ₹1.50 lakh in a financial year. Therefore, having multiple home loans does not increase the overall Section 80C limit.
New tax regime offers fewer home-loan deductions
The tax treatment is different under the new tax regime. Principal repayment on a home loan does not qualify for the Section 80C deduction under the new regime.
Similarly, interest paid on a loan for a self-occupied property does not qualify for deduction under the new regime. For let-out or deemed let-out properties, interest deduction is subject to the applicable rules and, in the case of let-out property, is restricted to the taxable rental income.
Therefore, while there is no fixed legal limit on the number of homes or home loans an individual can have, the tax benefits available on those properties depend on their use, the tax regime chosen and the applicable deduction and set-off limits.