The tax reality of multiple properties
Owning more than one house complicates your return. The department treats your main residence very differently from a second or third home.
Jargon check: self-occupied means a house you live in (taxable rent is nil). Deemed let-out means a property you do not rent out, but on which tax is charged on a notional (assumed) market rent.
The rule you should know
You can now treat up to two houses as self-occupied, with combined home loan interest capped at ₹2 lakh (Source: Section 23, Income Tax Act).
| Houses owned | Self-occupied allowed | Rest |
|---|---|---|
| 1 | 1 | none |
| 2 | 2 | none |
| 3+ | 2 (your choice) | deemed let-out |
The two-house rule
Earlier only one house could be self-occupied; any second one, even locked and empty, was deemed let-out. Now up to two houses can be self-occupied — their Annual Value (taxable rent) is treated as nil, and you may claim up to ₹2 lakh interest across both combined.
What about a third house?
With three or more, pick any two as self-occupied. The rest, if not actually rented, become deemed let-out.
How deemed let-out is computed
- Estimate the expected market rent.
- Deduct municipal taxes paid.
- Claim a flat 30% standard deduction for repairs.
- Deduct the entire home loan interest (no ₹2 lakh cap here).
- The result is added to your taxable income.
What you should do
- List all properties and choose the two self-occupied homes that minimise tax.
- Gather municipal tax receipts for any deemed let-out home.
- Use the full interest deduction available on let-out properties.
Common mistake
Leaving a third empty flat off the return. Even if no rent comes in, a deemed let-out property must be declared on notional rent, or you risk a notice.
How LastMinute ITR helps
Multiple properties, municipal taxes, and notional rent quickly cause defective returns. LastMinute ITR structures your house property schedule, helps choose which homes to mark self-occupied in your deductions, and compares regimes. You file and e-verify on incometax.gov.in.