The Indian government encourages real estate investments through various policies and incentives. Here are the key regulations and policies you should know about:

1. Stamp Duty & Registration Charges

Stamp duty rates is different from state to state, generally ranging from 5-7% of the property's value. Many states provide lesser stamp duty rates for women buyers or first-time investors in real estate world

State - Stamp Duty Rate - Women Buyers Discount

Goa - 6% - 4%

Uttarakhand - 5% - 4%

Rajasthan - 6% - 5%

Uttar Pradesh (Lucknow) - 7% - 6%

Great Tip: To save on stamp duty, You can register your second home in your spouse’s name. Additionally, you can use online stamp duty calculators available on government websites to estimate the charges in advance.

2. Home Loan Benefits You Must Avail

If you are financing your second home with a home loan, you can take advantage of tax benefits under Section 24(b) and Section 80C of the Income Tax Act.

Section - Benefit Type - Maximum Deduction

Section 24(b) - Interest on Home Loan - ₹2 Lakhs

Section 80C - Principal Repayment - ₹1.5 Lakhs

Important: These benefits are only applicable if the second home is not rented out and is classified as self-occupied.

Example: Assume If you have a ₹30 lakh home loan at 8% interest for 20 years, your annual interest payment would be approximately ₹2.4 lakhs. Under Section 24(b), you can claim ₹2 lakhs as a deduction, reducing your taxable income significantly.

Tax Benefits on Rental Income from Second Homes

If you rent out your second home, the income generated is considered Income from House Property under the Income Tax Act.

Here's all about it how it works:

30% Standard Deduction for the Maintenance Expenses

Deduction on Property Tax Paid

Deduction on Interest Paid on Home Loan (No Maximum Cap if Property is Rented Out)

Example Calculation:

Particulars - Amount

Annual Rental Income - ₹3,00,000

Standard Deduction (30%) - ₹90,000

Net Taxable Income - ₹2,10,000

Capital Gains Tax on Selling your Second Homes

When you sell out your second home, Capital Gains Tax applies based on the holding period:

Holding Period - Type of Gain - Tax Rate

Less than 24 months - Short-Term Capital Gain - As per Income Tax Slab

More than 24 months - Long-Term Capital Gain - 20% with Indexation

 Example Calculation: If you sell your second home after 3 years for ₹70 lakhs, which was purchased for ₹50 lakhs, the indexed purchase price would be approximately ₹60 lakhs. Your taxable long-term capital gain would be ₹10 lakhs, and the tax payable would be 20% on this amount (₹2 lakhs).

Best Tip For You Tip: You can claim the Section 54 exemption by re-investing the sale proceeds into another residential property within 2 years.

• GST on Second Homes

• GST applies only on under-construction properties.

• No GST is charged on ready-to-move-in properties.

• The current GST rate is 5% without the ITC on residential properties.

Tax Benefits for NRI Buyers

Non-Resident Indians (NRIs) can also invest in second homes in India with the following benefits:

• Home Loan Tax Benefits under Section 80C & Section 24(b)

• No GST on Ready-to-Move Properties

• Capital Gains Exemption under Section 54

How Innovest Helps You For Your Tax Benefits

At Innovest, we support our clients throughout the entire process of purchasing a second home, which includes:

• Clear Property Documentation

• Assistance with Loans

• Expert Tax Consultation

Guidance on Legal Compliance

Our knowledgeable tax consultants will help you navigate the difficult of capital gains tax, home loan deductions, and rental income taxation, ensuring you maximize your financial advantages.