In case of a home loan taken for a self occupied property, the principal amount repaid up to 1 lakh qualifies for deduction under Section 80C; while up to 1.5 lakhs of interest paid is tax-deductible under Section 24. This benefit gets reduced for second house. For the second house only the interest payment is eligible for deduction but there is no cap here as 1.5 lakhs. This means that if you are paying 3 lakhs as the interest entire amount is eligible for tax deduction subject to a formula prescribed.
In case of second house if the house is yet to be constructed, 20% of the total interest paid during the pre-construction period is also allowed as tax deduction. There is a limit however here which means that this benefit on pre –construction house is available for five years..