shelter is one of the basic human needs and buying a house is generally every households dream these days keeping in view the rise in income levels households also look at the option of investing in more than one house property people buy a second home for many reasons which interalia include as an investment for capital appreciation to use it as a holiday home to get a regular stream of income by way of rentals or to diversify their investment portfolio whatever be the reason an important aspect to be considered at the planning stage is the tax implication of owning and maintaining the second home second house selfoccupiedif an individual owns more than one house property for his use then under the provisions of the income tax act 1961 the act any one property as per his choice is treated as selfoccupied and its annual value is computed to be nil the other house property is deemed to be letout and a notional rent as per the provisions of the act is computed as the taxable income under the head income from house property in other words the second house is treated as being rentedout and its estimated rental income is treated as taxable income second house letoutif the second house is letout to a tenant the actual rent received subject to certain conditions is treated as the taxable income under the head income from house property deduction for municipal taxesthe taxes paid to the local authority generally the municipal taxes are allowed as deduction in the financial year in which such taxes are actually paid this is irrespective of whether these taxes pertain to the current financial year or the earlier year therefore an individual should keep a track of the municipal taxes paid and claim this deduction accordingly deduction for repair maintenance further a sum equal to 30 of the annual value of the house property is allowed as deduction towards repair and maintenance charges it is pertinent to note that this deduction of 30 is a fixed percentage irrespective of the actual amount incurred by the individual ie irrespective whether an individual incurs more or less amount he can only claim a deduction for 30 of the annual value of the house property interest deductioninterestingly in both the above scenarios ie whether the second house property is deemed to be letout or actually letout the actual interest paid on the housing loan is allowed as deduction this is contrary to the case of a selfoccupied property wherein the maximum interest on housing loan is restricted to rs 150000 pa subject to certain conditions hence investment in house property even if it is a second house does have its own tax benefits if one is lucky enough to own more than one house property then she can avail of tax benefits mentioned above in respect to the second housethe writer is executive director kpmg