Answer to this question is very simple. As many as you want and can afford. So there are no restriction under the tax laws or general laws on to the number of houses you can own. Likewise, you can obtain home loan also for the number of properties as you wish and you are able to service. But there are certain tax implications in case you own more than one house property. Let us understand the income tax implications.
Capital gains exemption on investing in a house
The Indian tax laws allow you to claim exemption from long term capital gains if you invest in buying or construction of a residential house. The exemption can be claimed in two categories. One under Section 54 is available with respect to capital gains on sale of a residential house and other one available under Section 54F is for capital gains on sale of any asset other than a residential house. Capital gains exemption under Section 54F can be with respect to any land, commercial property or even shares of unlisted companies etc.
For claiming exemption under Section 54F, there is one precondition that you should not be owning more than one house other than the one which is being constructed or purchased to claim the capital gains exemption. So in case you already own two houses on the date of sale of the other property, you are ineligible to claim this exemption. So such precondition of owning a house is there in case the capital gain arises from sale of a residential house under Section 54.
If you use more than one house
In case you own more than one house, which is occupied by yourself or by your parents, you have to treat one of the houses as self occupied and the other let out. Then you have to offer notional rent for tax even if no rent is received by you in respect of such property.
Deduction in repayment of principal of home loan
The Indian tax laws allow you deduction for principal repayment of home loan, taken for residential house from specified entities like banks, housing finance companies, Central government, state government etc under Section 80 C upto Rs 1.50 lakhs together with other eligible items like LIP, EPF, PPf, ELSS, NSC, tution fee etc. This deduction can be claimed for any number of home loans within the eligible limit of Rs 1.50 lakhs. In case of under construction properties, this benefit can only be claimed from the year in which construction is completed or possession is taken from the developer.
Deduction for interest on money borrowed
The deduction with respect to interest can be claimed for any number of properties. The deduction for interest is available from the year in which the possession is taken and the interest paid during the construction period can be claimed in five equal instalment beginning from the year of possession. The deduction for interest is allowable upto Rs 2 lakhs for one self occupied property. For the house property/ies which are in fact let out or have been deemed to have been let out, you can claim full interest paid for money borrowed for purchase/construction or repair of such house. However for all the house properties taken together whether self occupied or let out/deemed to have been let, the loss under the head ‘income from house property’ can only be set off upto Rs 2 lakhs against your other taxable income and the unabsorbed loss has to be carried forward to next eight years to be set off against income from house property.
So from the above discussion it becomes amply clear that instead of buying multiple houses in your own name, it makes sense for you to buy houses in the name of different family members.
The author is tax and investment expert and can be reached on firstname.lastname@example.org