As per the Budget 2017-18, tax benefit on loan repayment of second house under Section 72 of the Income Tax Act will be restricted to Rs 2 lakh annually. The owner can set off of loss towards second home against other heads of income up to Rs 2 lakh.
So far, there had no limits prescribed on benefits on a second house and a buyer could deduct the entire interest paid on the home loan. People who had a second house and used to let property could set off the loss from housing property against salary or any other income, with no upper limit prescribed. Now, these people can carry forward the losses not claimed for up to 8 subsequent years but now the limit will be Rs 2 lakh.
At present, if an individual has a self-occupied property (SOP), there is nil income offered for tax under Section 23 of the Income Tax Act, 1961. The interest paid on acquisition of such property is allowed up to Rs 2 lakh per annum under Section 24 of the Act.