Yes you can do the same. This is little bit tricky and need to be careful when any objection comes.
The Tax Department wants you to assume only one of the properties to be self occupied and therefore the Gross Annual Value of such a house will be nil. And Interest on Borrowed Money (for purchase or construction) up to Rs 2,00,000 shall be allowed to be deducted.
The Tax Department does not impose upon you which of the properties should be considered as let out. That choice is completely yours. Also, in case of a let out property, there is no limit on the amount that you can claim towards interest on borrowed money which means there is no cap of Rs 2,00,000. Now here is the opportunity for you to save tax – choose the house you would want to declare as let out where you have higher interest cost and lower Annual Value and this will in turn reduce your overall tax liability.
