Any Income from house property should be a part of your total income from other various sources such as salary, capital gains, business/profession and other income like winning from lottery, horse race etc. Mostly such Income from house property are in the form of rental income, even some time these incomes can be negative; for example, you have taken a home loan and you are paying the interest on the outstanding loan principal amount. If the house property is self occupied where obviously no rental income can be generated then these interests paid will be treated as loss (negative income) from house property. And the best part is you can claim such losses to reduce your net tax liability, but upto certain limit.

You might want to read Know the benefits of Property Investment, Taxation and its Tax Planning

In this article I will explain you how you can compute any income (including negative income) from house property which is very much required for filing annual total income tax returns.

Income from House Property

The term ‘House property’ consists of buildings or land belongs to such buildings. Income from letting out of vacant plots of land when there is no adjoining buildings will not be taxed under this head (but is taxable either under the head ‘Profits and Gains of Business or Profession’ or under the head ‘Income from other Sources’, as the case may be). The existence of a building is therefore an essential prerequisite for taxation of Income from House Property. ‘Building’ will include residential house (whether let out or self-occupied), office building, factory building, godowns, flats etc. But, the purpose for which the building is used by the tenant is also immaterial. It does not make any difference at all if the property is owned by a limited company or a firm. However, if the building or part thereof is used by the owner himself for the purpose of his own business then there will be no income from such portion of the house property.

In order to calculate income from house property, you need to know the Annual Value of the house property. As per Section 23(1)(a) of the Income Tax Act, Annual Value of a house property is the sum for which the property might reasonably be expected to be let out from year to year. So it is the notional rent which could be received if the property were to be rented.

There are two types of tax deductions available on income from property apart from the actual municipal taxes paid. The first is standard deduction of 30%. This means 30% of the rental income can be reduced as a standard deduction for repairs, maintenance etc. irrespective of the actual amount spent, if at all, during the financial year.

The second deduction, which is over and above the 30% standard deduction, is to do with interest u/s 24 on mortgage finance if the property is purchased on mortgage for the purpose of acquisition, construction, re-construction, repairs, renovation etc.

Deduct Municipal Tax

From Gross Annual Value, deduct Municipal Taxes (including Service Tax) levied by any local authority in respect of the house property. Municipal Taxes are deductible only if,

1. these taxes are borne by the owner , and
2. are actually paid by him during the previous year.

Municipal taxes, levied by local authority but not paid by the assessee during the previous year are not deductible. The remaining amount left after deduction of Municipal Taxes is Net Annual Value (NAV)

Deduction Under Section 24

As stated above there are basically two types of deductions are available under section 24, such as Standard Deduction u/s 24(a) and Interest on Borrowed Capital u/s 24(b). No deductions can be claimed in respect of any expenditure which is not specified in Sec. 24. For instance, no deduction can be claimed in respect of expenses on insurance, ground rent, land revenue, repairs, collection charges, electricity, water supply, salary of liftman, etc.

A. Standard Deduction [Sec. 24(a)]: 30% of net annual value id deductible irrespective of any expenditure incurred by the taxpayer.

B. Interest on Borrowed Capital [Sec. 24(b)]: Interest on borrowed capital is allowable as deduction, if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the property.

What needs to be kept in mind?

  1. If capital is borrowed for the purpose of purchasing a plot of land, interest liability is deductible even if construction is financed out of own funds.
  2. Interest on borrowed capital is deductible on “accrual” basis. It can be claimed as deduction on yearly basis, even if the interest is not actually paid during the year.
  3. Interest on unpaid interest is not deductible.
  4. No deduction is allowed for any brokerage or commission for arranging loan.
  5. Interest on a fresh loan, taken to repay the original loan raised for the aforesaid purposes , is allowable as deduction.
  6. In case of let-out property interest on borrowed capital is deductible fully without any maximum ceiling.

Read update Feb 11, 2017Govt restricts tax benefit on let-out property to Rs 2 Lacs for FY 2017-18

Computation of Income from House Property

In case of Self-Occupied Property

For self-occupied property, rental income will be taken as ‘NIL’ in the above calculation. The rental income is zero because you stay in that property and it doesn’t earn any rent. Thus, the income from a self-occupied property will always be zero or negative (to the extent of interest paid or the specified limit, whichever is lower). Accordingly, you cannot subtract municipal taxes nor can we deduct any standard deduction. But, you can still deduct the interest paid on the loan availed subject to a specified limit.

This loss from self-occupied property can be adjusted against your income from other sources such as salary, capital gains, business, etc and hence reduce your overall tax liability.

If you own more than one property, you can designate any one of these as self occupied property and pay tax on the others. It is advisable to choose the property where you have to pay minimum municipal tax as self occupied property. You can change the self occupied property every year

For the self occupied property, there is a limit to the interest that you can deduct. If the property is acquired or constructed after April 1, 1999 (and such acquisition/construction is completed within three years) then you are allowed to claim deduction of interest up to Rs. 1,50,000. For loans taken to reconstruct the house (and those taken prior to April 1, 1999), the limit is only Rs. 30,000.

In case of a self occupied house, since the annual value is NIL and only the interest is allowed as deduction (subject to a maximum of either Rs. 1,50,000 or Rs. 30,000), the income is negative to the extent of the actual interest.

How to Compute Income from House Property? Let-Out (Rented) and Self-Occupied

388 thoughts on “How to Compute Income from House Property? Let-Out (Rented) and Self-Occupied

  • September 7, 2013 at 3:51 PM
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    plz give an explainaition regarding property let out for residential purpose throught the previous year with a solved problem

    …i would be thankfull to u

    Reply
    • September 7, 2013 at 7:43 PM
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      Hi Lukas,

      For your understanding, let us assumed if the rental income for the previous year was Rs. 2,40,000 and Municipal Tax were paid Rs. 15,000 for the year. Also assume total interest paid on home loan repayment was Rs. 1,80,000. Then the income from HP will be;

      Total Rental Income: Rs. 2,40,000
      Less Municipal Tax Paid: Rs. 15,000
      Net Rent Received (Net Annual Value) = Rs. 2,25,000
      Les Standard Deduction u/s 24(a) @30% i.e. Rs. 67,500 (30% of Rs. 2,25,000)
      Less Interest Paid on Home Loan: Rs. 1,80,000
      Net Income From house property becomes; -Rs. 22,500 i.e. (Rs. 2,25,000 – Rs. 67,500 – Rs. 1,80,000)

      Hope you understood now 🙂

      Reply
      • January 7, 2014 at 3:06 PM
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        Hi
        Please respond to my following query :-
        I have a FLAT in Co-operative Housing Society which is given on Rent. There is a bank loan on the same. Tenant is paying Rent to me. I am paying Society monthly maintenance charges raised by society. My net Rental income is Rent minus society mainteance charges. Whereas if some repairs are required within in the flat that I have to bear myself.

        What I understood from above the maintenance charges paid by me to society can not be charged over and above 30% benefit whereas if I reduce the rent of the tenant and tell the tenant to pay the society charges directly then it gets included in the same.

        Reply
        • January 7, 2014 at 3:36 PM
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          Hi Chaudhary,

          In that case technically you only receive rent net off maintenance charges. But make sure your tenant claims HRA only on the amount he/she pays you as a rent (not like Total Rent is equals to “Payment to you plus Maintenance Charges”). Thus you need to see from all angles.

          What I have seen; many landlords, just to show lower income they tend to bifurcate rent received from tenant. For e.g. If rent is Rs. 12k p.m., the landlord issue rent receipt of lower value (say 7k p.m. or 8k p.m.) and rest they put is as water, maintenance, electricity charges etc. But I really feel pity about those hapless tenants who eventually pay full amount of rent (no other option left for them), but do not get complete benefits (in terms of HRA). I don’t think this is fair.

          Reply
          • March 6, 2014 at 7:19 PM
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            Hi Soubhagya,

            I am a tenant and pay flat rent + society maintenance. Could I get a tax benefit for Society maintenance?

          • March 6, 2014 at 7:55 PM
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            Hi Naren,

            You will get benefits only for rent payments, not for society maintenance charges you pay.

  • September 11, 2013 at 5:27 PM
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    If I rent out property for a partial period of a FY (say, for 3 months only), will I be able to claim tax rebate benefit u/s 24(b) for interest paid during the whole FY?

    Reply
    • September 11, 2013 at 8:43 PM
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      Hi Das,

      Yes! you can, but you need note one thing i.e. while computing Income from HP, complete 12 months rental receivable will be taken for annual value calculation.

      Reply
    • November 6, 2013 at 11:21 PM
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      Hi Charles,

      Sorry! I will not be able to clarify much on this.

      Reply
      • November 7, 2013 at 2:39 PM
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        Okay, thanks for your reply anyway 🙂

        Reply
  • November 21, 2013 at 9:58 PM
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    I have one property in jointely named with wife in matunga & one more will be getting possession on december 2013 the same also in jointely named. How can i take maximun benefit of income tax. 2nd home loan taken jointely i am the first applicant & wife second. but emi is paid by me 25000/- per month interest 21000/- principal 4000/- my plan is to let out second home.

    Reply
    • November 22, 2013 at 8:50 AM
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      Hi Praveen,

      If your spouse has no income or income with lower tax bracket than you, then in that case you can divide any income from such house properties in both names. This way some tax liabilities can be reduced. But again there is some mathematics to be done, if there is any loan repayments are happening and the same is substantially high amount. Of course all should be within the purview of IT law.

      Point to be noted in case of 2nd house property: Though complete loan repayment is happening from your end, and if you wish to claim entire interest payments as deduction u/s 24b then any rental income should be added to you income completely.

      Reply
  • November 22, 2013 at 11:26 AM
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    Thanks for reply
    There is no loan taken on 1st property at Matunga. Share in this property is 50 : 50 funded by both in the ratio of 50 : 50. Net Annual Value for this property is 15000*12 = 180,000. Can i get HRA deduction for paying Rent to My wife 7500 p.m. for half of the share in this property. 50% of this property will be treated as Self occupied property.My basic salary per annum is 400,000 & Hra allowance is 200,000.
    For the second property will be let out from December 2013 can i get interest deduction on loan taken from bank u/s 24 b & 30% deduction on rental income u/s 24 a. But in the second property i am the firsht applicant & my wife is second in Bank Loan Agreement & Builder.All the money is funded by me & repayment of loan & monthly interest is borne by me. Net Annual Value for second property is 25000*12=300,000. After SD value is 210,000. Interest paid is for entire year 252000 & prior year interest paid almost 600,000 before getting possession. Can i get the benefit of interest paid Rs. 120,000 for subsequent 5 years.Means i can get the benefit of loss from house property of Rs. 162,000 [int 120,000+252000-SD 210,000]. What wiil be the best computation where i will get maximum benefit of Income Tax. Even you can suggest how will be the ratio of second property which benefit to us.

    Reply
    • November 22, 2013 at 11:39 AM
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      Hi Praveen,

      In 1st property, you can not claim HRA by way of rent paid to spouse (the relationship between a husband and wife is not commercial in nature) and it may been seen dubious in the eyes of AO. Thus I suggest you to keep it as self occupied.

      In the second property, if you want to take max benefits of deductions (you have to claim previous year(s) interests as well), then you can add complete rental receivables in your income to take full advantages of deductions of interest repayment u/s 24b, standard deductions u/s 24a and municipal taxes etc. I can understand your spouse is just a part owner of the property and she has no contributions towards funding as well as repayments, then there will be no issue if you go by this proposition.

      Further you can take your own decision.

      Reply
  • November 22, 2013 at 11:56 AM
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    Thanks I appreciate your quick reply.

    Reply
    • November 22, 2013 at 11:57 AM
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      You are most welcome Praveen!

      Reply
  • November 25, 2013 at 6:54 PM
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    Dear Praveen, Let Out Property. Possession taken 03May13. Tenant moved in 01 Jul13.
    1. GAV/ NAV calc fm 01Apr13 to 31Mar14 OR 03May13 to 31Mar14?
    2. For NAV calc VACANT period will be 3 months(01Apr–01Jul13) or 03May–01Jul13?
    3. U/S 24A ,,, 30% will be on ACTUAL rent recd ie deducting the 3 months rent amount being vacant or on 12 months RECEIVABLE rent amount??
    Thankx n Rgds== Murthy

    Reply
  • November 25, 2013 at 6:58 PM
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    My last mail. It was not for Mr Praveen but for Mr Soubhagya Patra.
    2. Regret error— Murthy

    Reply
    • November 27, 2013 at 12:10 AM
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      Hi Murthy,

      For annual value, total annual rent receivable will be taken. You will get standard deduct u/s 24a on total annual (12 months) rent receivables.

      Reply
  • November 25, 2013 at 9:56 PM
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    Refer the 1st property [Matunga] . If i sold out 50% of my share to wife by paying Stam Duty & Registration charges by my wife. Loan is taken in the name of my wife showing the source of income from let out property & tutionfees. Now the owner ship is change & interest paid on loan is from genuine source. Now i can get HRA exemption ?????. & interest benefit from other let out properties. Refer the verdict given by Ahmedabad Income Tax Appellate Tribunal case between Bajrang Prasad Ramdharani & ITO for the year 2009-10 for HRA Rs.111,168.

    Reply
    • November 27, 2013 at 12:19 AM
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      Hi Praveen,

      I have come across many such debatable issues, where case result has gone in favour of the assessee, but sometime the interpretation of the case may be different (but you may try to relate your case with the same), then in that case it may go adverse.

      I am not discouraging you, but trying to communicate what is the simple way (within the purview of IT rules). Even though you want to take such calls then you can go ahead with such referral cases if you are confident of.

      Reply
  • November 27, 2013 at 7:58 PM
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    Thanks for reply
    Continue to my previous question suppose here I am not claiming HRA after property transferred to my wife name for safer side. Can she claim the interest benefit under SOP & simultaneously I can claim interest benefit under SOP of my property after let out period is over. My intention is to save the more taxes in future when interest paid on borrowed loan against notional rent is less & if I am not able to let out my property. I don’t want to have 2 property in my name to avoid tax on notional value of another property which i am not able to let out. Is there any problem for me & my wife once the above combination will do.

    Reply
    • November 27, 2013 at 11:54 PM
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      Hi Praveen,

      This proposition will work. I don’t think this will have any issue.

      Reply
  • December 5, 2013 at 9:03 PM
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    Thanks for reply.
    Mr.A has taken loan on 1st August 2006 against under construction property from Builder. Builder has given possession of property on April 2011. As per the Income Tax interest benefit can be available for Mr.A. Note: property not constructed within 3 years.In the same scenario if Mr.A let out the property after possession will he get interest benefit. Now days it is very difficult to get possession of property within prescribed time limit as per IT Act.

    Reply
  • December 8, 2013 at 3:04 PM
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    Hi, I had taken hand loan from my father in law to pre-close the home loan on a nominal interest. I continue to pay the committed amount to my father in law. the property is let out for rent because of my employment in another city. Can i claim the interest against borrowed capital ?

    Reply
    • December 10, 2013 at 1:12 PM
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      Hi Ahmed,

      As long as I understand, if you would have taken the loan (from your father in law) to purchase or construct house, then in that case you could have claimed loan benefits for tax purpose, but here you have taken loan to close an existing loan, thus I doubt whether you will get any such benefits.

      Reply
  • December 9, 2013 at 1:05 PM
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    Hi,

    My Question is Can i claim HRA exemption if i paying rent for my in-laws home who are retired persons and i myself am living in my own house for which i am repaying the loan.

    Reply
    • December 10, 2013 at 1:02 PM
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      Hi Adeeb,

      It’s No! You get exemptions of HRA benefits because you pay rent for your own accommodation.

      Reply
  • December 9, 2013 at 7:12 PM
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    Hi
    I stay in rented house with 14k rent.i also have own house in same city which gives me 13k rent.for home loan I paid50k principle and 3 lakh interest
    Can I apply for HRA and home loan benefits (principle in 80c and interest 1.5l deduct able from taxable income), this is in addition to (rent 13k * 12 – 10k property tax – 30% of 3 lakh total interest)?
    Also my wife plan to take 1.5 lakh interest deducted from her taxable.

    Reply
    • December 10, 2013 at 12:58 PM
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      Hi Akash,

      Yes! you can! as long as the reasons of your stay in a rented accommodation are genuine.

      But whether your wife can take the benefits or not, it will be difficult to answer as provided information are not sufficient.

      Reply
  • December 11, 2013 at 8:08 PM
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    please reply my query on 5Dec 2013

    Reply
    • December 11, 2013 at 8:25 PM
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      Ohh!! How come I missed..???

      In the case you share, it seems you are relating it to saving taxes on capital gains where construction needs to be completed within three years, but if the assessee wish you claim deduction on the interest paid on the borrowed capital, then of course “YES” he can claim 1/5th of the interest paid till construction is completed for the next five years (starting from the year of possession) including current year interest at max 1.5Lacs if self occupied or no max limit if let-out.

      Reply
      • February 11, 2014 at 8:13 AM
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        Just to reconfirm.. We can take benefit of tax on a under construction property only after I have taken the possession. Can I not divide the pre-emi paid annually by 1/5 (or take it as 20%) for each year and claim in each year while the constrution is still on and possession is not yet taken? The finance from my firm takes the bank documents and make the adjustments in the monthly payslip / Form 16, so I really need your guidance before I go ahead and submit the documents.

        Separately, once I have taken the possession of this under construction property, you are suggesting that if the propety is let out then we have no ceiling on the tax benefit. This means this property can well be your first home or second home or first home loan or second home loan and if its self occupied the tax limit benefit is 1.5L and if its let out then there is no ceiling.

        As long as it is loss of income under house property can one accumulate from multiple homes or is there any limit on the number of home loans?

        Does the property have to be actually let out of can we also take notional rent? Since the notional or deemed rent is not coming in as any transaction in the bank account, how do you show this income !

        Reply
        • March 6, 2014 at 10:48 PM
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          Hi Pankaj,

          You can claim interest deduction only when the construction is completed along with pre-construction interest if any. Answer to the other query is; yes you can show a notional rent for the property even if it’s not actually let out as per deemed to be let-out option.

          Reply
  • December 12, 2013 at 6:01 PM
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    I have recently bought a flat(on loan) in the same society where i am stay on rent. I am getting HRA benefit also. Now can I still stay on rent to avail HRA benefit and rent out the newly bought house to get full tax exception of interest paid (more than 3 lakhs) on loan. I will show income from rent as income from property. There is a doubt as I will be staying on rent in the same society where i have bought house. Will income tax deptt question me why you are staying on rent and not in your own home? Please suggest what to do legally.

    Reply
    • December 12, 2013 at 7:56 PM
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      Hi Amit,

      It might be seen as tax evasion in the eyes of AO, thus he/she might reject any such claims of full interest on borrowed capital due to property being let-out. You might find many people doing the same thing what you are planning to, but if you are unfortunate and caught or questioned for this activity, then AO might levy penalty at his/her own discretion.

      Reply
  • December 17, 2013 at 8:34 AM
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    I am currently staying in pune in rented apartment where pay rent Rs.25000, i have property in navi mumbai which will be let out by mid jan for 23000. I am paying Rs. 52755 as its EMI. Out of this EMI only 7000 is the principal amount which is getting deducted. This property in Navi mumbai is 15 year property & renovation work is going on. They are charging Rs. 6388 per month for renovation & Rs. 2400 as maintenance charges. I am paying around Rs. 6000 against property tax. This property is jointly owned by me & my wife. Wife is not working at this moment. So my question is should I add both (Myself & wife ) name in the lease agreement for gaining the max tax benefit or should it be on my name only. It would be create help if you can help with the calculation for the same.

    Reply
    • December 17, 2013 at 8:49 AM
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      Hi AS,

      With this much of information it is very difficult to say which option will be beneficial to you. But on the prima facie what I see is, currently you are paying approx Rs. 5,49,060 [ i.e.( Rs. 52,755 – Rs. 7,000) × 12] only towards interest on borrowed capital, which seems to be a big amount. Thus it’s better you claim all the interests paid as loss from house property by making all the agreements in your name.

      Reply
      • December 17, 2013 at 10:37 AM
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        if i make the agreement on both of us name & continue paying the EMI and other charges from my pocket. will that help.
        For example : If i have shared income on leased property (50:50) my wife takes 11500 & i take 11500. She wont be clamming any tax rebate. In my income tax i show 11500 as rent income & than show all the expenses / income. this will reduce the rent income deduction. i am not whether this is valid or not, kindly suggest.

        I am making agreement on my name . please let me know what all details you need to make a wise decision, if this details can be shared online i will share it

        Reply
        • December 18, 2013 at 9:21 AM
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          Hi AS,

          In that case only 50% total interest repayment can be claimed by you as loss from house property.

          Reply
  • December 18, 2013 at 11:56 AM
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    Thanks for earlier reply.
    Confusion cleared for under construction property investment in case of Capital Gain from sold out property to save the taxes. Within 3 years possession is required.

    Presently staying in self occupied property. Possession taken another property in month of December 2013. Prior period interest 500,000 up to 31/3/2013 & 160,000 for the period 1/4/2013 to 30/11/2013. Total interest paid prior possession 660,000. Property not let out.
    Notional rent 15,000 p.m will be considered. After possession interest paid 20,000*4=80,000 & Principal amount 5000*4=20,000 for the period Dec to March 2013.
    following is my calculation for loss from house property
    A] Notional rent 15,000*12=180,000-[30% 54,000]=126,000 less 1/5th of prior interest 132,00 + interest paid for dec to march 80,000 net loss 86,000.

    B] Notional rent 15,000*4=60,000-[30% 18,000]=42,000 less 1/5th of prior interest 132,00 + interest paid for dec to march 80,000 net loss 170,000.

    C] Notional rent 15,000*12=180,000-[30% 54,000]=126,000 less 1/5th of prior interest 100,000[note: interest paid upto 31/3/2013 taken ie 500,000] + Interest paid for Apr to Nov 2013 160,000 + interest paid for dec to march 80,000 net loss 114,000.
    what will be the correct calculation A , B or C. Will i get the 80c benefit of 20,000 amount paid for the period Dec to Mar 2013.

    Reply
    • December 18, 2013 at 5:22 PM
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      Hi Praveen,

      For your understanding, upto 31-Mar-2013 Rs. 5,00,000 will be considered prior period interest since you have taken the possession in FY 2013-14. Thus 1/5th of Rs. 5,00,000 i.e. Rs. 1,00,000 plus current year ‘s interest i.e. from 1-April-2013 to 30-Nov-2013 Rs. 1,60,000 + upto March 2014 Rs. 20,000 × 4 = Rs. 3,40,000 is eligible to be shown for let out property case.

      Now Loss from house property will be;

      Rs. 15,000 × 12 = Rs. 1,80,000 less standard deduction 30% = Rs. 1,26,000 less interest paid on borrowed capital i.e. Rs. 3,40,000 = – Rs. 2,14,000 (Loss from House Property)

      Also whatever principal payment is done during FY 2013-14 (complete 12 months) will be eligible for deduction u/s 80C.

      Reply
  • December 20, 2013 at 12:38 PM
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    Hello,

    I have a house booked, I don’t have the possession yet. Can i claim HRA, Interest and principal paid? The house which i have booked is in the same city where i have a rented apartment.
    The possession is planned after March 14.
    In my earlier organization i have claimed all three things mentioned .

    Reply
    • December 20, 2013 at 1:49 PM
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      Hi Swapnil,

      Yes! you can, but it is subject to approval of AO because you own a house property in the same city.

      Reply
      • February 11, 2014 at 8:23 AM
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        Dear Soubhagya

        In the above response, please note that Swapnil Gujar is stating that the possesion of his house is not taken as yet. Can he claim the tax benefits on interest payouts (EMI or PRE_EMI) before the possession is taken? I have just posted a related question.

        Reply
        • March 6, 2014 at 10:51 PM
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          Hi Pankaj,

          To claim such interest or pre-construction interest u/s 24b, the acquisition/construction should be completed within 3 years from the end of the financial year in which capital was borrowed; and the person extending the loan certifies that such interest is payable in respect of the amount advanced for acquisition or construction of the house or as refinance of the principal amount outstanding under an earlier loan taken for such acquisition or construction.

          Reply
  • December 21, 2013 at 4:58 PM
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    I own a house which is self occupied. Also a portion of house is given on rent. I claim 1.5L deduction for the interest payment. how the tax will be calculated on the income from rent.
    In my case will there be any tax on rented income as house is under self use also.

    Reply
    • December 21, 2013 at 6:25 PM
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      Hi Sunil,

      In your case the calculation for income from house property will be based on area wise division where self-occupied and let-out portion will be treated as two separate units. Thus any municipal taxes, rent, interest etc will be proportionately divided and income of both the units will be computed separately.

      Reply
      • April 15, 2014 at 5:11 PM
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        Can you give some example how this will be calculated.
        Lets say you pay interest amount 200000 and receive rent 100000, One floor is rented out and one floor is for self + some vacant land.

        Regards,

        Reply
        • April 15, 2014 at 6:05 PM
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          Hi Vipin,

          The annual value of a residential property/buildings or lands belonging to such property or buildings of which you are the owner, will be chargeable to tax under the head ‘Income from house property’. With regards to your query, I feel it is will be logical to consider the property as two separate units, one as self-occupied and other as let-out. In case of let-out Rs. 1 lacs rent received will be treated as gross income from house property where you need to adjust standard deduction of 30% and 50% of total interest paid on borrowed capital. I just assumed it, but the ratio will depend on area of usage.

          With regards to self-occupied portion, you are left with 50% of total interest paid which can be taken as deduction u/s 24b along with 50% of total principal repaid as deduction u/s 80C.

          P.S. Here land belonging to property/building should be in the form of approach roads to and from public streets, compounds, courtyards, backyards, playgrounds, kitchen garden, motor garage, stable or coach home, cattle-shed etc.

          Reply
  • December 21, 2013 at 7:51 PM
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    I have a Joint loan for a property solely owned by my father where i am the only person paying the EMI due to his incapacity (through an ECS setup on my salary account). I also pay a monthly sum as rent to my Father for letting me & my wife stay in this same property. We have entered into a Lease agreement for the same where i transfer the rent value to my father’s account each month from the same salary account. His taxable income including the rent value is in the non taxable bracket hence he does not file for IT. Can i claim both HRA and Home Loan Interest & Principal repayment?

    Reply
    • December 22, 2013 at 8:48 AM
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      Hi Riz,

      Since the property is not owned (even partly) by you, then you can not claim any loan benefits for taxation purpose, but yes there seems to be chances of getting claims of HRA for the rent payments since you have lease agreement with your father.

      Reply
  • December 23, 2013 at 7:24 PM
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    Hi Soubhagya..
    what is better for claiming IT rebate …..whether to show house as self occupied or as let out property.
    And if i get posssession in December …can i let it out for jan and feb and claim tax benefit for entire year???

    Reply
    • December 23, 2013 at 8:08 PM
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      Hi Naman,

      With this much of information, it’s very difficult to say whether self-occupied or let-out is better. If you are talking about claiming interest on borrowed capital (I just assumed), then by letting out the property from Jan 2014 onwards you can get entire year benefits, but self-occupied will limit it to the extent of Rs. 1.50Lacs even if full year interest is higher.

      Reply
  • December 23, 2013 at 8:42 PM
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    Thanks soubhagya for a very quick reply. I availed loan in 2007 and got the possession two days back. As per sec 24 i can avail only 30,000 rs as tax rebate as the construction and possession has happened after 3 yrs from availing the loan. Therefore i think showing or letting out the property is better choice. Just wanted your expert advice on this. Thanls

    Reply
  • December 24, 2013 at 12:31 PM
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    I am paying rent 30K per month to NRI owner .Is TDS deuction is mandatory.
    IF yes,Is there any leagal wayout, so that I need not to deduct tds and submit

    Reply
    • December 24, 2013 at 1:28 PM
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      Hi Navin,

      Yes TDS is mandatory! Here TDS shall be deductible under section 195 and rate shall be 30% plus applicable cess. Thus, you are required to deduct TDS at 30% of the rent each month.

      Fyi, Just the way buyer of property from a non-resident, the payer of the rent to a non-resident is responsible for deducting the tax at source. The same process of getting a TAN and issuing a TDS certificate applies in this case too. See the link below

      http://www.succinctfp.com/index.php/how-to-deal-with-tds-while-buying-immovable-properties-from-nris

      Reply
  • December 25, 2013 at 2:05 PM
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    Hi,

    I have bought a house in Patna and currently stay in Mumbai. The sale deed has been signed in August, but the registration would be concluded in January. I have 2 questions

    A) If I rent out the flat in January for say 10000/- (3 months in this fiscal), what would be my rental income for the year (1.2 lakhs or 30k or 90k, considering the initial sale deed was signed in August)?

    B) Also, If I dont let out the flat, I assume I can claim 1,50,000/- deductible from my salary. Am I correct in this assumption?

    Reply
    • December 25, 2013 at 9:02 PM
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      Hi Rohit,

      For calculation of Income from House Property, complete letable value will be taken since the property is purchased, and then those unrealised rent for the vacant period has to be deducted. Eventually Rs. 30K (as per your case) will be considered as gross annual value for taxation purpose.

      With regards to your second query; Yes you can do show by showing the house property as self-occupied u/s 23(2). Visit below link for the Situation 3 as explained;
      http://www.succinctfp.com/index.php/how-to-claim-tax-benefits-on-both-hra-interest-on-housing-loan/

      Reply
      • December 29, 2013 at 10:25 PM
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        Thanks for your reply 🙂

        Reply
        • December 30, 2013 at 1:04 PM
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          You are most welcome Rohit.

          Reply
      • July 2, 2014 at 11:52 AM
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        Dear Sir,
        I have sold out property on 18th Jun 2013
        I have to calculate the rent income for the FY year 2013-2014.
        1) Annual letable value or rent received or receivable: 7000*12=84000
        2) The amount of rent which cannot be realized:
        84000-(7000*3)=63000
        Is the above declaration is correct in case of unrealized rent.
        Thanks in advance.

        Reply
        • July 3, 2014 at 10:21 PM
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          Hi Santosh,

          You said property was sold on June 18, 2013 then why are you considering full 12 months as let-out or letable! You should take rent received or notional rent upto June 18, 2013 for calculation of Income from House Property for FY 2013-14.

          Reply
          • July 25, 2014 at 6:40 PM
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            Thanks Sir

  • December 26, 2013 at 3:34 PM
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    Hi,
    Can you please advise, if the loss from House Property can be set off with other income like salary for a particular year.
    Thanks in advance.

    Reply
    • December 26, 2013 at 7:45 PM
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      Hi Harish,

      Losses from house property can be set off against any income under any head of Income during the same assessment year, but in the subsequent year it has to be set off against any Income under the head of House Property only. These losses can be carried forwards for 8 assessment years.

      Reply
  • December 28, 2013 at 2:50 AM
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    I have a house property in Bangalore due to be completed in Fed 2014. I have paid interest of Rs4,00,000 this year and Rs2,00,000 in 2012-2013. I stay in Mumbai and get HRA benefit since I pay rent. My question is, if I let this property out for 2 months, can I show this property as let out and claim full deduction of interest paid. Ie Rs4,00,000 plus 1/5th of Rs2,00,000, or will it still be treated as SO.

    Also, what will my annual property value in this case. Since the procession is in Feb, will the annual value be Rs30 (assuming let out for 15k pm) or annualised value of 15k. Can you pls give me my net loss for this AY assuming above scenario and what will be the best way to increase the loss. Many many thanks in advance.

    Reply
    • December 28, 2013 at 10:40 AM
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      Hi Manoj,

      Yes! You can. By letting the property for 2 months you can claim full interest for the current financial year plus 1/5th of Rs. 2Lacs. Gross annual value of the property will be Rs. 30K then you can have standard deduction of 30% along with any municipal taxes paid.

      Of course this is the best way to increase the losses 🙂

      Reply
  • December 28, 2013 at 10:54 AM
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    Thanks that was exceptionally prompt, also if the scenario above, if I am not able to put the property on rent, can I claim to AO, that the property be treated as deemed to be let out instead of SO. I think SO provision is to prevent hardship to tax payers, (when someone has empty property by way of employment to prevent if from being changed gross annual value), so in this case, I don’t want property to be treated as SO I should be technically allowed since I am making SO as Deemed to be let out. What’s your view on this.

    Secondly, since redg is due in Feb, will my HR agree to advance rental agreement prepared in advance. Any papers required if I treat SO as deemed to be let out. Thirdly, my wife is joint owner, so I plan to get a n deceleration letter saying EMI is paid by first applicant. Should that be OK to claim full benefit. Thanks

    Reply
    • December 28, 2013 at 12:31 PM
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      Hi Manoj,

      If the said house property is a second house property left vacant then you can show it as deemed to be let-out. Even in that case you have to pay tax on the notional rent. Eventually no fun

      About the declaration, I suggest you to check this with your employer.

      Reply
  • December 28, 2013 at 12:40 PM
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    What if that’s the first property and left vacant.

    Reply
  • December 28, 2013 at 1:45 PM
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    It’s strange that as per IT law even if I rent out for say one day it I can claim total interest of Rs4500000 in my case as loss and only Rs1500000 as loss if it is left vacant. The very SO provision which was to prevent hardship to property owners to make GAV zero is acting against us due to diff in interest permissible. Isnt there thing that we can make vacant property as deemed to be let out and rather than SO.should not this be left to accesse if he does not wants to claim benefit of SO

    Reply
  • December 30, 2013 at 12:35 PM
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    Hi,
    I am working in Bangalore. I purchased a flat in chennai last year. I have declared it as an Self-occupied property till now (April 2013 – Dec 2013). But we are planning to let it out for rent from jan 7th. How shall i declare it now in my TDS?! The total interest paid for this financial year comes around Rs. 2.8 lakshs. I assume it would be better to change the declaration to “Let Out property” from next month?? Since the interest paid is much higher. How shall the Annual income from rent will be calculated now? Appreciate your assistance here!!

    Reply
    • December 30, 2013 at 5:15 PM
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      Hi Karthik,

      As per your scenario, once you declare the house property as let-out for a part of the year you will not get any deduction for the self-occupied period and income will be computed assuming the property is let out throughout the year. Also note, a Reasonable Expected Rent shall be taken for the full year, but eventually the Actual Rent receivable will be taken only for the let-out period.

      In short you have to consider only the actual rent for the let-out period.

      Reply
      • January 20, 2014 at 12:03 PM
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        Hi Soubhagya,
        I m also fall in this situation, the difference is, I stay in the same city (for rented as well as owned flat)
        What if I show the property is rented for 2-3 months for Ex April -June 13 & shows it in the houst property computation as a loss, & claim the interest paid for throughout year.
        Take example of my case…
        REnt received is suppose 6000 PM
        Munciple Taxes Paid 7500
        Standard Deduction 3,150
        Interest paid to the Bank 2,39,550
        So the benifit I get will be 232200.. for this years tax calculation.(ie 18000-sum(7500+3150+239550)

        Ur quick reply wil be highly appriciable..
        Vipul

        Reply
        • January 20, 2014 at 6:26 PM
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          Hi Vipul,

          As I have indicated in many of my responses that you might try this as others are doing, but eventually it’s upto assessing officer in case of scrutinisation you need to prove your point as why are you staying in a rented accommodation even though you have your own house property in the same city.

          Reply
  • December 30, 2013 at 8:35 PM
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    Should i declare HRA of 18000 rent or should i do let out property as I have a house for which i am paying emi. pls confirm

    Reply
    • December 31, 2013 at 8:48 AM
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      Hi Deepika,

      Information provided by you are not enough to say whether claiming HRA or showing losses from house property is better.

      Reply
  • December 30, 2013 at 10:20 PM
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    If property is rented from JAN 2013 for Rs 25000 & I am paying interest of 6 lak per annum for year 2013 -2014. So the rent income for 13-14 would be 25000 * 3 or will be 25000 * 12.

    Reply
    • December 30, 2013 at 10:35 PM
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      got the answer from your earlier post.

      Reply
      • December 31, 2013 at 8:45 AM
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        That’s great!

        Reply
  • December 31, 2013 at 12:29 PM
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    I own self acquired property valued below 25 lacs. I have taken home loan and interest for the same is 1,70,000 rupees. My question is does this interest can be claimed under income / loss from let out property and interest deduction from yearly taxable income means I get deduction of Rs. 3,40,000 ? P.S my acquired house is not rented how to calculate loss from let out property?

    Reply
    • December 31, 2013 at 5:00 PM
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      Hi Darshan,

      Since the said house property is self-occupied then for the purpose of calculating income from house property, the annual value becomes “NIL” and you will only be eligible to take Rs. 1,50,000 at max as interest deduction from your taxable income.

      P.S. If the property is not let out then there is no question of calculating income/loss from let-out property.

      Reply
  • December 31, 2013 at 5:24 PM
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    Hi Patra,
    I have constructed house at bangalore last May, occupied my new house by August time. Till that time I have stayed at rented house. Do I can avail HRA for the period March-August & Interest Paid/Principal rest of the financial year.

    Reply
    • December 31, 2013 at 6:03 PM
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      Hi Kumar,

      Yes you can claim HRA exemptions for those months when you stayed in rented accommodation i.e. during rent paid from April to end of month August. From August onwards till end March 2014 you can claim interest paid as deduction from your total taxable income.

      Reply
  • December 31, 2013 at 6:51 PM
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    Hello Saubhagya,

    I moved to my new home in mid November 2013. This building has 3 floors of 500 sq.ft each. I have occupied first and rented out the other two. The rentals paid are Rs.8000/- pm for each from January 2014 onwards. The home loan was taken in May 2012 and the Pre-EMI payed till Nov 2013 is Rs.1,75,000/-. I will be paying an EMI of Rs.25,000/- from Dec 2013 of which the interest is going to be Rs.21,000/- and principal Rs.4000/-

    I have a home in my home town for which I have been claiming tax benefits till last year. The interest amount for this year is going to be Rs.85,000/- and principal projected is Rs.75000/-. I plan to claim HRA benefits as I stayed for rent paying Rs.10,000/- till November.
    How do I calculate the GAV/NAV and income for other source?
    Summary:
    Pre-EMI May 2012 to Nov 2013 – 1,75,000
    EMI Dec 2013 to Mar 2014 – 21,000 + 4000
    Rent paid from Apr 2013 to Nov 2013 (8 months) – 8 * 10,000/- pm
    Rent received Jan 2014 to Mar 2014 ( 2 floors) – 2 * 8000/- pm

    Thanking you,
    Raghu

    Reply
    • January 2, 2014 at 9:38 PM
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      Hi Raghu,

      Any income from the entire house property you are currently staying in will be calculated considering it as three separate units. One will be self-occupied and other two will be let-out. Finally Income of all the units shall be computed separately.

      Since you had been staying in a rented accommodation, you can very well claim HRA exemption till Nov 2013 as per the specified limits.

      Fyi, till end of March 2013 whatever interest paid as pre-construction will be divided by 5, plus current year total interest will be added up and then proportionate interest for the unit which is self occupied will be subtracted to claim as loss from let-out property.

      Reply
  • January 2, 2014 at 1:19 PM
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    Dear Soubhagya,

    I purchased a flat in 2007 and took loan of 20 lacs ,got possesion in 2009 – till last year the property was vacant and got on rent lats june @ 9200/month , now I want to now whether I will get tax rebate only on principle part or is there any way i can get rebate on interest part as well.How I m going to calculate the income under other eads nd the benifit of tax as welll. property is in rajesthan – Bhiwadi and I stay on rent in Gurgaon.

    Pls help

    thnx
    Sweta

    Reply
    • January 2, 2014 at 4:44 PM
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      Hi Sweta,

      Since you have put the house property as let-out (even for a part of the year), you cannot claim any principal repayment as deduction u/s 80C, but yes entire interest for FY 2013-14 plus 1/5th on pre-construction interest can be claimed u/s 24b along with standard deduction of 30% on rental value.

      As you mentioned, you stay in Gurgaon, then you can continue to get tax benefits on HRA.

      Reply
  • January 2, 2014 at 5:10 PM
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    If I want to claim my interest against the home loan over and above 1.5L u/s 24b, I understand that the property needs to be let out. And also this rent needs to be added as an additional source of income. Is there any calculation for the “notional minimum” rent which can be declared?

    Reply
    • January 2, 2014 at 9:05 PM
      Permalink

      Hi Manish,

      There is no specific calculation for notional rent. You need to see what the rental is for similar property for nearby area. It’s something like market rent that you could have been earned if it would have been rented out.

      Reply
  • January 2, 2014 at 7:40 PM
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    Hi Soubhagya

    I work in Chennai but i have taken housing loan and the property is in Coimbatore, i stay in a rented home in Chennai, as per my company system i am not allowed to exempt for my Interest paid against Housing loan.

    I can only get exemption on my HRA and Housing loan Principle. is this the way it works ??
    OR
    can i get exemption on my Interest paid for my housing loan also?

    Regards,
    Vasanth

    Reply
      • January 6, 2014 at 5:11 PM
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        Thanks a lot Soubhagya, really helpfull… You are doing a great job.Appreciate it..

        Reply
        • January 6, 2014 at 6:22 PM
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          Hi Vasanth,

          You are most welcome! And thank you for these kind words of appreciation.

          Reply
  • January 4, 2014 at 1:03 PM
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    Hi Soubhagya ,

    I took a housing loan in year 2009 for under construction flat in Noida (full advance payment). Now I’m based in Hyderabad due to Job and paying EMIs since Aug-2009 to Jan-2014. I am about to take possession next month (Feb-2014) after paying remaining 5% of total payment.

    Query:
    (1) Can I claim tax rebate of 1.5 lakhs for FY 2013-14 + 20% of aggregated Interest for previous years?
    (2) From the forum, I could only get info like I can’t if the possession is delayed over 3 years and property is self-occupied. What options are available to me here so as to claim 1.5 lakhs?
    (3) As I’m based in another city (rented accommodation), If my Noida Flat can be shown as rented-out and tax rebate of 1.5 lakhs be claimed? Any other information which you feel can help with tax saving as the impact would be hard on me.

    Reply
    • January 4, 2014 at 2:54 PM
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      Hi Kumar,

      Find the answers in sequence to your queries;

      1. Yes, you can! Here Home Loan interest benefits for the full year FY 2013-14 plus 1/5th of total interest paid till end of March 2013 (subject to max cap as per self-occupied property i.e. Rs. 1,50,000) can be claimed.
      2. Do not worry about it. Read Situation 3 here: http://www.succinctfp.com/index.php/how-to-claim-tax-benefits-on-both-hra-interest-on-housing-loan
      3. If you show the house property as let-out you might get higher benefits as self-occupied house property will limit the interest claim upto Rs. 1,50,000 in a particular FY, but in let-out case there no upper limit.

      Reply
      • January 4, 2014 at 7:29 PM
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        Thank you for your reply. I sincerely appreciate the time and effort you put helping others.

        Reply
        • January 4, 2014 at 8:24 PM
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          Thank you very much for your kind words of appreciation.

          Reply
  • January 5, 2014 at 11:35 PM
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    Hi,
    My parents have their own property in Andheri in their own name on which they get rent. The rent is 28K which of this 14K is deposited in Mom’s Account and another 14K is deposited in Dad’s Account. Both my parents are above 60 yrs of age.

    I have a home loan for a property in New Bombay with my wife and Mom (EMI is 21.5 K and Rent is 18K). Currently I am receiving Rent in my wife’s account and emi is getting debited from her account.

    We have a home loan for a property in Kandivali wherein 4 people are co-applicant. Myself, my brother, my mom and my dad. (EMI 73K Rent (Self Occupied))

    I am staying in Pune due to my Job. I am claiming HRA benefit.
    My Brother and Sister In Law are staying with my parents in Kandivali.

    I and my brother are into Job and are fallowing under 30% tax bracket. We have option to show that my parents are also paying EMI and we all are equal contributor or only we both (myself and my brother) are paying EMI of 73K.

    Can you suggest best possible option to claim the maximum tax benefit in current situation.
    Also let us know if we can take rent from parents for the portion that they are not owning to gain tax benefit.

    Reply
    • January 6, 2014 at 9:36 AM
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      Hi Vipul,

      To suggest the best possible option may not be so easy to explain in few lines. This might need further discussion. You may reach to us (email at info@succinctfintech.com) to know more about our fee-only services.

      Anyways taking rent from parents can be an option to reduce taxes, but it needs to be looked at from 360 angle for its +ve or -ve impact.

      Reply
  • January 6, 2014 at 11:36 AM
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    Hi Saubhagya,

    Thanks for such detailed explanations and replies.

    1). I have a second flat for which is transferred in my name by the Builder (Vatika in Gurgaon) in June 2013. I have the transfer letter.

    2). I expect to get the Permissive possession letter (only to carry out woodwork as Occupation certificate hasn’t been received by builder) OR the possession letter in March 2014.

    3). Can I claim interest paid on housing loan after adjustment of notional rent for the full year in both the above cases?

    4). Can I get it even if I don’t get possession letter?

    5). What documents do I need to prepare or submit to IT department for the same?

    Regards,
    Sumit

    Reply
    • January 6, 2014 at 11:47 AM
      Permalink

      Hi Sumit,

      If building ready to move in and complete registration is done, then I don’t think there is any issue with claiming interest benefits. Completion certificate may be enough to claim this.

      Hope I answered all your queries here.

      Reply
  • January 7, 2014 at 1:24 PM
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    Hi Soubhagya
    I took a Composite loan in Oct 2012 (Pre-EMI period was upto Sept 2013 and EMI started from Oct 2013) . My house construction started in Apr 2013 and will be getting completed by this month end. Rental income will start from Feb and March 2014. I am not planning to stay in this house for a year and currently staying in a rented house 10 kms away from this new property. My queries are
    1) Under which head I need to claim tax – Let Out or Own Use?
    2) What about Pre-EMIs?
    Regards
    Anup.

    Reply
    • January 7, 2014 at 2:05 PM
      Permalink

      Hi Anup,

      You can show it under Income from House Property Heads and it may be better you show as Let-Out, but make sure construction and possession is complete as early as possible so that you can put it for rent during those periods of Feb, March 2014.

      Answer to your second query is; once you show the house property as Let-Out you can claim entire interest paid starting from April 2013 till end 31st March 2014, so this include your Pre-EMI from April’13 to Sept’13. Any interest paid before April’13 can be divided by 5 and can be claimed for 5 subsequent assessment years.

      Reply
  • January 7, 2014 at 3:07 PM
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    Hi Soubhagya,
    I’m staying in a rented house in the same city where i own house (on loan) & my parents are staying in my own house. can I claim HRA & both principal and interest repaid on the home loan.

    Reply
    • January 7, 2014 at 3:44 PM
      Permalink

      Hi Kalyan,

      If your office is located far from your house and it’s really difficult for you to travel all the way daily or there is any other genuine reason prevails that makes you stay in a rented accommodation instead staying in your own house then in that case yes! you may get benefits of HRA as well as Housing Loan interest deduction from your taxable income.

      Reply
      • January 7, 2014 at 5:04 PM
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        thanks for your quick response… 🙂

        Reply
        • January 7, 2014 at 5:22 PM
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          You are most welcome!

          Reply
  • January 7, 2014 at 5:22 PM
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    Hello Soubhagya,
    I own a house in Bangalore for which I have taken a home loan. But, I currently work in Hyderabad in a rented house and my parents currently live in our house in Bangalore. I have paid around 3,00,000 (Interest+principal). Can I claim HRA for the place in Hyderabad and submit housing loan interest as a let-out property with nil income?

    Reply
    • January 7, 2014 at 6:05 PM
      Permalink

      Hi Hareesh,

      Since you have to stay in Hyderabad due to employment purpose even though you have your own house in Bangalore, you can claim both HRA as well as Home Loan Interest deduction as Self-Occupied Property (though you don’t occupy actually) u/s 23(2) of Income Tax Act. Visit here & Read Situation 3: http://www.succinctfp.com/index.php/how-to-claim-tax-benefits-on-both-hra-interest-on-housing-loan/

      It is not advisable to keep Bangalore Property as let-out which is not in actual scenario. This will be treated as “Tax Evasion”. Even if you show this as let-out, you will have to at least show some notional rents which eventually get added to your income and taxed accordingly.

      Reply
      • January 7, 2014 at 6:39 PM
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        Thanks a lot for the reply!

        Reply
        • January 7, 2014 at 9:22 PM
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          You are most welcome Hareesh!

          Reply
  • January 7, 2014 at 7:31 PM
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    I got possession of my second property in Sep 2013. I shall be letting it out in Feb 2014. Assuming the rent is 15,000 pm.

    1) Will the annual value be 15,000*2 or 15,000*12? if it is only for two months i assume the loss on house property will be much more.
    2) Can I claim the tax benifit for the entire year?
    3) Do I need to submit rental agreement as well?
    4) Even if I rent out for one day in a financial year Iam eligible for entire interest amount ( max limit)

    Please clarify me at the earliest. Thanks in advance

    Reply
    • January 7, 2014 at 10:00 PM
      Permalink

      Hi Varun,

      Find the answers in sequence to your queries;

      1. It’s Rs. 15,000*2 for calculation of tax liability.
      2. Loan interest benefits for entire year plus 1/5th on all the interest paid before March’13.
      3. Yes, you need to provide proof of property being let-out and rental income details
      4. There are situation where all depends on approval of assessing officer.

      Reply
  • January 7, 2014 at 8:11 PM
    Permalink

    Hi Patra,

    I got possession of my second house in Sept 2013. I Plan to rent it out from Feb 2014. assuming the rent is Rs 15,000
    1) How is the annual value calculated 15000*2 or 15000*12 . If it it 15000*2 then loss on house property will much higher and i can enjoy maximum benefit. The interest paid by me is close to 4 lacs in this year
    2) Do I need to submit rental agreement as well?
    3) So even If I rent it out for a month in financial year, I can claim the loss on house property based on the rent i have received?
    4) Can I deduct the maintenance charges I have paid for the year from annual value?
    Please clarify If I can go ahead and avail the tax benefit as I have paid around 4 lacs as interest this year Waiting for your explanation.. Thanks a ton!

    Reply
    • January 7, 2014 at 10:03 PM
      Permalink

      Hi Varun,

      Most of your queries I have answered in above reply.

      I don’t think you can claim maintenance charges as deductions.

      Reply
  • January 7, 2014 at 10:31 PM
    Permalink

    Hi Soubhagya
    We have a flat which is co-owned with my wife on 50% ownership basis.
    Loan for the flat is taken jointly from my wife’s bank, where she works.
    Interest outgo (Rs.230481/- for FY 2013-14) is paid by my wife vide salary deduction.
    I am retired and have no income except for bank interest earned and capital gains from stock market dealings. Being a senior citizen, my tax free income is Rs. 250000/- which is not fully used.
    Municipal Property Tax Paid is Rs.13000/-
    I want to issue a Rent receipt of Rs.24000/- p/m to my Son so that he can claim Tax benefit against his HRA.
    Can me alone or my wife alone can issue this Rent receipt.
    How to go about this. Kindly advice.
    Further, last financial year in the “Income from Property’ sheet of my wife’s return 50% ownership was indicated and she claimed tax benefit on interest paid on borrowed loan.
    In my own return I did not mention the same and this was left blank. Would this create a problem?

    Reply
    • January 8, 2014 at 10:14 AM
      Permalink

      Hi Joseph,

      Since you do not have any income (may not be sufficient to contribute towards loan repayment) and eventually all the repayments are happening from your spouse income which I understood, in such case your spouse can claim entire loan interest benefits, but subject to she has to show even entire rental income under the head of income from house property while filing her IT returns. Else everything has to be proportionately divided among you both. Suppose, you claim a part of rental income (just to reduce spouse’s tax liability being joint owner) then you also need to claim part of loan interest repayment (even though you don’t pay), so eventually your spouse will miss out to claim 100% of loan interest.

      Your spouse can issue rent receipt for your son’s HRA requirements.

      Reply
  • January 7, 2014 at 11:39 PM
    Permalink

    Hi soubhagya

    I have a self occupied property in Bangalore and paying interest/principle [150000/100000]
    second let out property in native on loan paying interest/Principle [150000/1000000] .. can i claim both the self occupied interest and principle amount and let out property maintenance/interest amount? its crossing 300000 alone for interest component!!

    #this is my third property on loan

    Kindly reply.

    Reply
    • January 8, 2014 at 10:11 AM
      Permalink

      Hi Sathish,

      If you own more than one house property, then it’s upto you to choose between one of them as self-occupied and other (or rest) as let-out, for which a notional rental income is required to be offered for taxation, but not both (or all) as self occupied.

      Reply
  • January 8, 2014 at 11:40 AM
    Permalink

    Thanks for your reply. What is notional rental income? even if we don’t actually let out the property, we can get tax benefit.(since there is no upper limit for second property.

    Thanks again!

    Reply
    • January 8, 2014 at 11:50 AM
      Permalink

      Hi Varun,

      Notional rent is nothing, but a similar rent that you may get if you put the house property on rent or equivalent rent for a similar property in the nearby locality.

      For let-out or if it is deemed to be let-out (like treated as let-out) then there is no upper limit for interest claim for deduction.

      Reply
  • January 8, 2014 at 12:10 PM
    Permalink

    ok thanks. so in my case even I have not let out the second property this financial year, I can put a notional rent and claim tax benefit since the interest paid is big amount. Or Are there any other ways? Please suggest. Thanks again for your reply

    Reply
    • January 8, 2014 at 12:21 PM
      Permalink

      Yes! You can show it as deemed to be Let-Out.

      Reply
  • January 8, 2014 at 12:36 PM
    Permalink

    Can you please give me your contact number? Can I discuss with you? Thanks

    Reply
  • January 8, 2014 at 2:44 PM
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    Hi Soubhagya,

    I have following situation : I and my wife both are salaried individuals and file our respective ITR every year.

    I have two houses in the same colony. One I have 50% co ownership with my Mother & for Second house ( which is on loan ) I have 50% co ownership with my wife.

    Second house is rented out. I understand that I can have house loan benefits for second house . Question I want to ask you is that, can I or my wife claim HRA benefit for the first house where my mother has is 50% ownership ?

    Thank you for your time

    Regards,
    Manish Sood

    Reply
    • January 8, 2014 at 6:09 PM
      Permalink

      Hi Manish,

      I don’t think your wife can claim HRA benefits for a rented accommodation where your mother has 50% share. Why because, you are part owner of the said property and as per the justification “the relationship between a husband and wife is not commercial in nature”.

      There might be some cases where this has gone through in favour of the assessee (tax payer), but the same is always debatable. There is high chance that AO (assessing officer) reject such claims.

      In addition to this your spouse already owns another property (50% share though) in the same colony and this become another –ve point.

      Reply
  • January 9, 2014 at 9:28 AM
    Permalink

    Hi Soubhagya,

    Not sure if you already answered a similar query as mine, however asking again. I have two houses both purchased on home loans and both the loans are currently running.
    1. First house is vacant since one month and the interest portion on this home loan is less.
    2. second house I have moved into recently and has a bigger loan amount and interest portion.

    Since I can claim tax benefit for both loans I wanted to know how this can be done:
    1. What is the notional rent that I need to show for the first property, which is currently vacant?
    2. Which property can be shown as the primary property for which the interest exemption limit will be only 1,50000.00? I want show the second property as secondary where I am paying more interest currently but it is self occupied.

    Reply
    • January 9, 2014 at 11:24 AM
      Permalink

      Hi Aashish,

      Notional rent is nothing, but a similar rent that you may get if you put the house property on rent or equivalent rent for a similar property in the nearby locality.

      Since you own two house properties, you can decide one as self-occupied and another as deemed to be let out. Secondly you can very well figure out where the loan interest is higher and you can save max tax by showing either let-out or self-occupied.

      Hope I answered to your queries!

      Reply
  • January 9, 2014 at 2:21 PM
    Permalink

    Hi Soubhagya,

    Constructed 2 floor building by taking home loan. One is self occupied and other is let out. Initially I have taken composite loan mainly for land and one floor construction. During construction, plan got changed and the result is the other floor. For that again I approached bank for a additional loan. Bank provided a loan on same property with different loan account instead of top up on existing loan (2 loan accounts on same property but different floors). So now can I show,
    – One floor as self occupied linked to one loan account?
    – One floor as let out linked to another loan account?

    Please suggest.

    Thanks,

    Reply
    • January 9, 2014 at 10:30 PM
      Permalink

      Hi Narayan,

      You may show this as two separate units as one house as self occupied and other as let-out, but you can not claim benefits for two loans. As per me you will only be eligible to get benefits on first loan for the two houses (I mean the two floors).

      Reply
      • January 10, 2014 at 2:54 PM
        Permalink

        Hi Soubhagya,

        Thanks for the reply. But I did not understand ” As per me you will only be eligible to get benefits on first loan for the two houses”. Even the second loan taken from the bank is a Home loan and may say extra loan sanctioned & released through a different loan account from the same bank.

        Can you clarify this please?

        Thanks,
        Narayana

        Reply
        • January 10, 2014 at 3:02 PM
          Permalink

          Hi Narayan,

          I think your Bank RM might not have communicated properly while selling you another loan for the same house property (two floors will not be considered two separate house property.). This new loan will not be treated as NEW LOAN at all. It’s technically called Top-Up loan for repair and renovation etc. Thus you won’t get any benefit for this.

          You may get additional interest benefits upto Rs. 30,000 for such loans taken for repair and renovation only, but not more.

          Reply
  • January 9, 2014 at 3:32 PM
    Permalink

    Hi Soubhagya Kumar,

    I had purchased a ready to move flat in october – 2012(home loan was taken) and rented out in the same month. I took help from a collegue and completed my tax filiing in last year but I didn’t try to understand the details completely due to due date issue. This year I want to fill tax declaration on my own and I have gone through your blog. It helped me a lot and I am able to complete the computation of Loss from Letout property(as described by you to Lukas on 7th September, 2013).

    Example detials are as follows:
    Rental Income = 36000
    Muncipal taxes = 2000
    Less 30% on rental income = 10200[30% on (36000-2000)]
    Net Annual value = 23800 [(36000-2000) – 10200]
    Interest paid on borrowed loan = -96148
    Net Income/Loss from House Property = -72348

    Please verify and let me know whether the calucation which I have done is proper or not.

    But when I look at Form 12 C, I am not able to understand how the calculations can be done based on above details. Could you please suggest and help me out?

    Also I am applying for HRA as my flat is in my native place and I am currently working in other location. Please confirm?

    Reply
    • January 9, 2014 at 10:39 PM
      Permalink

      Hi Madhus,

      Your calculation is absolutely correct. You need to recheck the calculations for Form 12C.

      Reply
      • January 10, 2014 at 10:07 AM
        Permalink

        Hi Soubhagya Kumar,

        Based on Computation of Loss from Let out Property(metioned in my earlier query), I have filled 4th and 5th sections in Form 12C as follows:
        (4)
        (i) Income from house property = 23800
        (ii) Profits and gains of business or profession = Nill
        (iii) Capital Gains = Nill
        (iv) Income from other sources
        (a) Dividents = Nill
        (b) Interest = – 96148
        (c) Other Income (specify) = Nill
        (5) Aggregate of sub items (i) to (iv) = – 72348

        Could you please verify and confirm?

        Thanks & Regards,
        Madhu Sri

        Reply
        • January 10, 2014 at 10:36 AM
          Permalink

          Hi Madhu,

          Your entries are incorrect! You need to put -Rs. 72,348 in section (4) sub section (i) then section (iv) sub section (a)(b)(c) is talking about any income to be mentioned from other sources like, dividend, bank interest, interest on securities etc, but not the interest that you pay to bank for the borrowed capital. If you have no income from other sources then leave it “BLANK”. Section (5) is total of sub section (i) till (iv) for section (4) i.e. -Rs. 72,348.

          P.S. Form 12C also ask for “in case of loss, enclose computation sheet”. You can get the certificate from a Chartered Accountant or let us know in case you need it. Cheers! 🙂

          Reply
          • January 10, 2014 at 2:45 PM
            Permalink

            Hi Soubhagya,

            Thank you so much for your help and sorry to buzz you again. I have already mentioned Housing Loan Principal Repayment amount in Deduction under section 80C and also mentioned “Net Income/Loss from House Property = -72348” in another section by attaching Form 12C. But what would be the value for “House Loan Interest Deduction U/S 80EE” in “Deduction under Chapter VI A” section. Please suggest.

            I didnt submit the certificate from chartered accountant in lasy year. Is that required to submit and what are the particulars required to get that certificate? Please clarify.

            Thanks & Regards,
            Madhu Sri

          • January 10, 2014 at 2:52 PM
            Permalink

            Hi Madhu,

            If you have already shown house property as let-out then you are not eligible to claim principal repayment. If done so, please inform your employer and get it rectified asap. Else you have to pay tax at higher rate later.

  • January 10, 2014 at 10:04 AM
    Permalink

    Hi Soubhagya,

    Do I need to submit original or copy of rental agreement in case of loss on property? Also I need to submit computation of loss on house property and possession certificate?

    Thanks in advance for your reply.

    Reply
    • January 10, 2014 at 10:40 AM
      Permalink

      Hi Varun,

      If you are submitting certificate from professional with regards to loss from house property then there is no requirement of giving/showing original rental agreement or copy of it.

      Reply
  • January 10, 2014 at 11:23 AM
    Permalink

    Hi Patra,

    Can I get the certificate from you today? notional rent is calculated for whole year or can be partly shown?

    Thanks..

    Reply
    • January 10, 2014 at 12:27 PM
      Permalink

      Hi Varun,

      You need to give us at least two working days to prepare it.

      Notional rent will be taken for the period since you got the possession and then actual number months of rent received has to be adjusted from it.

      Reply
  • January 10, 2014 at 11:41 AM
    Permalink

    Hi Soubagya,

    This is in reference to your answer to one Mr. Das last year

    If I rent out property for a partial period of a FY (say, for 3 months only), will I be able to claim tax rebate benefit u/s 24(b) for interest paid during the whole FY?

    Yes! you can, but you need note one thing i.e. while computing Income from HP, complete 12 months rental receivable will be taken for annual value calculation.

    you gave a different answer to me..contradicting..to me you said only those two months rent will be taken into account. please clarify. Thanks

    Reply
    • January 10, 2014 at 12:23 PM
      Permalink

      Hi Varun,

      It’s not a different answer, if you look into the replies to other queries also, I have mentioned eventually you need to pay tax on the actual rent received or letable value for the financial year. But for calculation purpose complete year’s rental income will be taken (though notional), but finally one has to take out unrealised rent from it. Final effect is what you actually get.

      Reply
  • January 10, 2014 at 1:17 PM
    Permalink

    What should be the calculation in my case? Rent :Rs 10,000 Possession from Apr 2013 showing as rented from Sept 13. 4.2 lakhs is the interest iam paying.

    For 7*10000 = Rs70000 Iam getting the final loss as -3.8 lacs Is that correct?

    please let me know thanks

    Reply
  • January 10, 2014 at 4:30 PM
    Permalink

    Can you please give me the calculation?

    Notional Rent 12*10000 = 120000
    Actual : 7*10000 = 70000
    How would the rest of the calculation be to arrive at the loss incurred on the property?
    Please help me on this. Interest Paid : 4.2 lakhs

    Thank you so much!

    Reply
    • January 10, 2014 at 6:27 PM
      Permalink

      Hi Varun,

      It will be; Rs. 70,000 less standard deduction Rs. 21,000 i.e. 30% of Rs. 70,000, thus Net Annual value (NAV). Further you need to adjust interest payment from NAV to get loss from house property i.e. Rs. -3,71,000 which is [Rs. 70,000 – (Rs. 21,000 + Rs. 4,20,000)]

      Reply
  • January 11, 2014 at 1:48 PM
    Permalink

    Hi Patraji,
    I am having self occupied property & other one is let out.
    1] If notional rent considered for entire financial year 80 C benefit for principal amount paid will be allowed for deemed let out property.
    2] If property rent out can we claim 80 C benefit for principal paid.
    3] With reference to reply on Harish question on Dec 26,2013 I have confusion over here.
    Means losses from house property will be set off against any other income in the year when we have possession of property. In subsequent year we can not set off loss from salary income , means i have to carry forward the same till 8 assessment year. If I am having every year losses from house property the same can not be set off agst salary income it will be allowed in the year of possession only. Your clarification required.

    Reply
    • January 11, 2014 at 5:23 PM
      Permalink

      Hi Praveen,

      I guess both 1&2 questions are asking the same think. Fyi, if property is actually let-out or considered to be let-out then there is no benefits for claiming deduction 80C available.

      With regards to set off losses from HP, for example; if you incurred losses from house property around Rs. 4,50,000 but your salary income is only Rs. 2,50,000 during the assessment year then unadjusted losses from house property will Rs. 2,00,000 i.e. [Rs. 4,50,000 – 2,50,000]. In this case losses Rs. 2,00,000 will be carried forward to next assessment year to adjust only with income from house property. In case house property income in the subsequent assessment year is not sufficient then left over losses will again be carried forward another assessment year and so on. This can be carried forward next 8 years only even if 100% of losses could not get adjusted within these 8 assessment years.

      P.S. In case you get a question how come one can have more losses from house property (i.e. he has paid more interest to bank), but salary or other income is lesser than the losses; then let me know I will share a scenario with you. Cheers!

      Reply
  • January 12, 2014 at 8:27 PM
    Permalink

    Thanks for the reply
    I understood the section 71 B for carry forward the losses from House Property & benefit for vacancy for the period when the property remains vacant.
    Another question for you
    If I switch the loan from existing Bank [SBI] to another Bank [ICICI] for SOP.
    Construction of property not completed within 3 years during period of SBI home loan. Interest benefit restricted to 30,000. If I wanted to switch the loan form SBI to ICICI will I get the maximum benefit of Rs. 150,000 of interest.

    Reply
    • January 12, 2014 at 10:14 PM
      Permalink

      Yes, you will!

      Reply
  • January 13, 2014 at 1:56 PM
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    Hello,
    I have house on my mothers name and other new house which is on my name in same city.
    Me and my family (wife along with parents) stay in new house on which i pay EMI of 28k monthly basis. I am planning to avail Principal and interest benefits for new house home loan. Can my wife can avail HRA by claiming that we stay in old house which is on my mothers name and pay rent to our parents who is retired and no source of income and simultaneously i claim new house home loan deduction?

    Reply
    • January 13, 2014 at 3:25 PM
      Permalink

      Hi Abhijit,

      You might try this proposition, but I can’t say whether AO approves it. Also do not forget to file returns for the income under house property for your mother since she is getting rent from your wife due to which she (your wife) is claiming HRA.

      In such scenario both Loan benefits and HRA can be claimed.

      Reply
  • January 13, 2014 at 4:14 PM
    Permalink

    Hello Sir,
    Thank you very much for info. Can I ask why AO cant approve both HRA and home loan deduction.
    Yes both houses in same city but they are on two different persons name one on my name and other is on my mothers name.
    So, my question if we stay in my mothers house for rent of 8K which is 96K per year so my mothers income is 96k only as she is housewife and my wife can declare PAN of my motehr while filing landlord details…so that will suffice issue.
    My concern about Tax authority, can they question if i have new house self occupied for which i am claiming home loan deduction why wife is claiming HRA under diffrent home (Ideally husband wife stays in one home ) considering both flats are in same city

    Reply
    • January 13, 2014 at 10:34 PM
      Permalink

      Hi Abhijit,

      I indicated a chance, but not sure. May be a question (in case of scrutiny), since you have already a house property in the same city where your spouse work for and you are supposed to stay together. People having similar scenario go with such route (which you indicated), but I can’t just say “yes you can as well”.

      Reply
  • January 14, 2014 at 12:21 PM
    Permalink

    Also, is the 1/5 deduction on all pre-completion interest part of housing loan part of 1.5 lacs (sec 24) or it is over and above this value and has no cap

    Reply
    • January 14, 2014 at 2:45 PM
      Permalink

      Hi Vivek,

      If the house property is shown as self-occupied then Rs. 1.5 Lacs cap is inclusive of per-completion interest else there is no max cap for let-out property. Cheers!

      Reply
  • January 14, 2014 at 8:40 PM
    Permalink

    I stay on rented flat in bangalore and i have a property in other state . my own house is vacant and I use it when ever I am on vacation.

    Can I claim both interest on my own property as well as HRA ?
    Do I need to show it as letout or self occupied ?
    Quick response will be much appreciated.

    Thanks
    Avinash

    Reply
  • January 16, 2014 at 1:24 PM
    Permalink

    Hi Soubagya,

    I have a property(on which I am having a home loan) at my own city and it is rented out and currently I am staying in Gurgaon due to job purpose. So I am applying both HRA from my current owner and opting tax benefit on home loan interest. In this case am I eligible to opt tax benefit for home loan principal amount too under section 80C?

    Form 12C asking computation sheet(“in case of loss, enclose computation sheet”). Can I get the certificate from you? Please find the below details and let me know if you need any further information to provide certificate.

    Date of loan borrowed and house occupation is 1st, October 2012.
    Home loan principal amount for the period 01-04-2013 to 31-03-2014 is 79,701
    Home loan interest maount for the period 01-04-2013 to 31-03-2014 is 96,148
    Total loan amount is 10,00,000

    Monthly rent of my own flat is 3000

    Thanks in advance.

    Reply
    • January 16, 2014 at 4:42 PM
      Permalink

      Hi Balu,

      If you have put the house property as let-out then you are not eligible for deduction of principal repayment u/s 80C.

      For computation certificate you need to email your requirement at info@succinctfintech.com

      Reply
      • January 17, 2014 at 12:50 PM
        Permalink

        thank you for your help. I have sent you an email with my details regarding computation certificate. Please verify and let me know if any details required.

        Reply
        • January 17, 2014 at 1:15 PM
          Permalink

          Sure!

          Reply
  • January 22, 2014 at 1:27 PM
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    : I and my wife both are salaried individuals and file our respective ITR every year

    I have two houses in the same colony. I have 50% co ownership with my wife for both houses. First house is self occupied with lesser loan than second one.

    Second house is rented out from september 2013 after registry of second house in august 2013 5000/= per month.
    Now upto last year we both are taking benefits of self occupied house loan (interest and principal both) half -half of actual amount we paid as we have taken loan also on both name at the ratio of 50:50.
    Now i m confused how to show both houses? Can i will show rental income in my return ?

    Example detials are as follows:
    Rental Income = 35000/= (from Sep 2013 to mar 2013) 5000/ per month)
    Muncipal taxes = nil
    Less 30% on rental income = 10500[30% on 35000)

    Interest paid on borrowed loan = -176476 (88238 as half on 50:50 ratio)
    Net Income/Loss from House Property = -63738
    Please verify and let me know whether the calucation which I have done is proper or not.
    my wife is also taking benefit of interest 88238/= (half of actual amount paid 176476/=) Are we both correct ?

    Reply
    • January 22, 2014 at 10:21 PM
      Permalink

      Hi Dinesh,

      If your spouse is claiming 50% of the interest then it’s within the purview of IT rules that she needs to claim 50% of rental income as well. Let me know if I have to clarify something further.

      Reply
  • January 22, 2014 at 1:43 PM
    Permalink

    we both are salaried class filling seperate IT returns.we have one self occupied house jointly owernership and on jointly loan at ratioo of 50 :50. this year in august we purchesed second flat and rented out from september @ 5000/- per month. We have taken seperate loan for this second house on joint name ,paying half half EMI , owernership on both names.
    now how we both can take advantage of second loan –
    Example detials are as follows:
    Rental Income = 35000/= (from Sep 2013 to mar 2013) 5000/ per month)
    Muncipal taxes = nil
    Less 30% on rental income = 10500[30% on 35000)

    Interest paid on borrowed loan = -176476 (88238 as half on 50:50 ratio)
    Net Income/Loss from House Property = -63738
    Can my husband show rental income with loss on home property (-63738) and i will show 88238/=as half of the actual interst paid ?
    IM I correct? pl guide us? what is from 12 c? which papers are to submitted in our offices?

    Reply
  • January 22, 2014 at 7:58 PM
    Permalink

    Hi Soubhagya,

    1. A flat with EMI 23,500 and rent 15,500. Rent agreement executed and has given the PAN to tenant to submit for his tax papers.
    2. An individual house with EMI 35,000 and self occupied.

    Is it mandatory to show the flat as let out property (loss = 23500-15500 pm) or can we show the individual house as let out property (loss = 35000-15500 pm) ?

    Reply
    • January 22, 2014 at 10:36 PM
      Permalink

      Hi Bipin,

      For calculation of Income from House Property you need to consider only interest component. It seems you are taking EMI (principal + interest) for the calculation.

      You are required to claim interest for let out for the property which is actually let out. You cannot adjust it with self-occupied property.

      Reply
  • January 25, 2014 at 4:51 PM
    Permalink

    i have two flats adjacent to each other having single door entrance and single kitchen but the flats have two separate agreements. Please let me know if this can be considered as one self occupied property (SOP) for income tax purposes or is it that for the second flat i have to pay tax as per annual rateable value. do let me know section or related case if any

    Reply
    • January 25, 2014 at 9:06 PM
      Permalink

      Hi Vandana,

      These can be considered as two separate units for computation of taxable income from house property like one as SOP and other as let-out, but I am not sure whether assessing officer will buy the the point i.e. two separate flats having one entrance and one kitchen (this is in case any requirement comes).

      Reply
  • January 27, 2014 at 12:46 PM
    Permalink

    thank you Soubhagya Kumar Patra
    I appreciate your work.
    regarding this i read somewhere that 2 flats, one in wing A and another in wing B was
    considered as one self occupied property. How can I site this as an example. Bcos
    my flats are joined together. Link for the above is given below. Ayushraj has put it up.

    http://www.caclubindia.com/forum/details.asp?mod_id=81966&offset=1#.UuYGIF26at8

    Thank you in anticipation
    Vandana

    Reply
    • January 28, 2014 at 9:15 AM
      Permalink

      Hi Vandana,

      Case mentioned about with regards to house as A wing and B wing is perfect. Even I believe single building having two floors can sometime be treated as two separate HPs (two units) under the act. But my concern was about single door and single kitchen.

      Two some extent your justifications are genuine. I hope there should not be any problem with the proposition you are looking at. But I can’t confirm it.

      Reply
  • January 27, 2014 at 3:52 PM
    Permalink

    Dear Saubhagya,

    First- thanks to you for your detailed and well explained threads on this subject!
    1. I have a property in Ghaziabad, bought last year. Our company wants possession letter as a proof but the letter given by builder for possession so far have a disclaimer not to be treated possession for legal purposes, as the completion certificate has not be recieived by them. Can this be a proof of posession ?
    2. I reside in Delhi. The property mentioned above been given possession in August. Can I claim loss on property for full interest amount ( by filling form 12C), or as self occupied upto limit i.e. 1,50,000, because I’m not sure if Ghaziabad and Delhi are treated as separate cities from the perpective of taxation. deistance between houses is around 50KM. If the former, will I need to take notional value for whole FY 13-14 in consideration?
    Pls reply.

    Reply
  • January 30, 2014 at 10:23 AM
    Permalink

    Hi Suabhagya,

    I have a flat which I had rented out from Apr-Sept 2013 and I, myself, was staying on rent for that period. October onward I have moved into the flat. Can I claim HRA for the first six months? Also, what will be my loss on housing property computation for this scenario?

    Thanks,
    Dinesh

    Reply
    • January 30, 2014 at 11:17 AM
      Permalink

      Hi Dinesh,

      Yes, you can claim HRA exemptions for those months between Apr-Sept 2013. But it’s difficult for me to tell what will be your losses with this much of information.

      Reply
      • January 30, 2014 at 11:36 AM
        Permalink

        Hi Soubhagya,

        Thanks for the quick turnaround.

        The rent for the property was Rs. 31,500/- per month (from Apr-Sep 2013) and the interest on housing loan for the year is Rs 3,68,233/-. My question is can I claim :
        a) Loss on Hosing property for the first six months (Interest for six months – 70% rent for six months), plus
        b) Deduction under section 24 – Interest on Housing Loan for the later six months (Lesser of Rs. 1,50,000/- and Interest for last six months)

        Thanks,
        Dinesh

        Reply
        • January 30, 2014 at 11:53 AM
          Permalink

          Hi Dinesh,

          In this case, you will not get deduction for the self-occupied period and income will be computed as if the property is let out throughout the year. It is to be noted that the reasonable expected rent shall be taken for the full year, but the actual rent received/receivable shall be taken only for the let-out period.

          Reply
          • January 30, 2014 at 11:57 AM
            Permalink

            Thanks Soubhagya, this is really helpful!

          • January 30, 2014 at 12:25 PM
            Permalink

            You are most welcome!

  • January 31, 2014 at 5:22 PM
    Permalink

    Pls can u give ur no. I have few queries.

    Reply
    • January 31, 2014 at 10:15 PM
      Permalink

      Hi Kumar,

      You can share your queries via contact us. If required I will share my contact details.

      Reply
  • February 13, 2014 at 6:39 PM
    Permalink

    I have bought a flat in Wagholi, Pune for which I got occupation in Jan-14.
    I am residing currently in Pune in rented home due to genuine reason.
    So, the new home will be vacant for next 2 months as I will be shifting my family in new home in April-14.
    I have submitted both rent receipts & housing loan exemption certificate but not availing the benefit of rent receipts.
    Please guide & advise for getting both benefits.

    Reply
    • February 14, 2014 at 3:23 PM
      Permalink

      Hi Taheer,

      You are eligible to get full deduction of interest paid for the FY. If your employer has not considered it, later you can file your IT returns before the due date where under income from house property, show 2 months rent (actual or assumed figure) and adjusted interest payments along with 30% standard deduction of rental income. With this way you may get refund if in case tax has been deducted at a higher rate.

      Currently you can continue to get HRA exemption benefits.

      Reply
  • February 24, 2014 at 4:09 PM
    Permalink

    I stay in delhi on rented accomadation, which i’m claiming HRA. Also, i possess a house at chennai. if i get a monthly rent of Rs.7000/month & if i pay Rs.3, 50,000 as interest component for the same house.

    i want to know in this case, whether self occupied is beneficiary or Let out is beneficiary…

    Pls help me out

    Reply
    • February 24, 2014 at 5:26 PM
      Permalink

      Hi Dhanduaero,

      I believe renting out the property seems better as you can claim approx Rs. 2,91,200 loss from the property (adjusting rental income) where as Self occupied will get you deduction of Rs. 1,50,000. Even if you consider principal repayment of Rs. 1,00,00 for 80C deduction, then total deduction comes to Rs. 2,50,000 (80C Rs. 1,00,000 + 24b Rs. 1,50,000).

      P.S. above suggestion is based on given information, but this may not be exact.

      Reply
  • March 4, 2014 at 8:51 PM
    Permalink

    Hi,
    I am planning to buy a house and my monthly interest would be close to 7 lakhs per year. I plan to live in this flat. So it will be treated as self occupied and I can claim only 1.5 lakhs as interest deduction. Now, if I rent a room in the 3 bedroom flat for say one month only, can I claim one-third interest for tax deduction.

    Reply
    • March 4, 2014 at 10:30 PM
      Permalink

      Hi Kapil,

      I don’t think this will work.

      Reply
      • March 5, 2014 at 11:49 AM
        Permalink

        Thank you for the swift response. Could you please elaborate. So how best can I do better tax planning?

        I also have a plot in another state. Can I do minimum construction of one-2 rooms for say 10 lakhs, treat that one as self occupied and this one (with 7lakhs interest) as Deemed to be let out, although I will be staying in this one?

        Reply
        • March 5, 2014 at 4:11 PM
          Permalink

          Hi Kapil,

          That’s a good idea, but it depends on when the construction gets completed. In such case you have the option to choose one house as self-occupied and other one as deemed to be let out where you pay higher interest. But remember! you need to consider notional rent while claiming deduction as loss from house property.

          Reply
  • March 9, 2014 at 3:31 PM
    Permalink

    Hi Kapil,

    I have a let out property/flat. I got possession of this flat in Jan, 2014. For tax declaration for this year, do I have to consider “notional income” for the period from April, 2013 to Dec, 2104 during which my flat was in construction phase. I am aware that we need to consider notional income for constructed property which are not given on rent i.e. which are vacant. For the period Jan, 2014 to March, 2014, I have put my flat on rent and I plan to declare the rent amount.

    Regards,
    Rishi

    Reply
    • March 9, 2014 at 7:44 PM
      Permalink

      Hi Rishi,

      Upto Jan 2014, your flat wasn’t in a lettable condition where any rent could have been realised. In such case you will be taxed only for the income received/receivable during the period between Jan 2014 & March 2014.

      Reply
  • March 20, 2014 at 6:50 PM
    Permalink

    I find this site very useful. I will refer this site when I will find any difficulty in computing income from house property. Thanks.

    Reply
    • March 20, 2014 at 11:24 PM
      Permalink

      You are most welcome Iqbal!

      Reply
  • March 25, 2014 at 7:27 PM
    Permalink

    Hi,
    I am planning to buy a flat in my work location with loan amount of 25 lakhs.

    I already have another housing loan for a house where my parents are staying in my home town, in which the amount left to pay is 3 lakhs.
    Could you please tell me since my new flat will be second house, will i get complete tax exemption on interest paid (say first year 2.5 lakhs if i am taking a loan for 25 lakhs for 15 years).
    How I should declare to income tax for best tax exemption ?

    Thanks
    Deepu

    Reply
    • March 25, 2014 at 9:26 PM
      Permalink

      Hi Deepu,

      If you own two houses, you have the option to choose one house as self-occupied and another as deemed to be let-out. So in your case you can show new house as let-out and claim full interest on repayment of borrowed capital.

      Reply
  • March 28, 2014 at 12:21 PM
    Permalink

    Is it compulsory to take standard deduction of 30% in house property?

    Reply
    • March 28, 2014 at 2:24 PM
      Permalink

      Hi Shreyans,

      Yes! it is. Why? don’t you like Deductions ? 🙂

      Reply
  • April 3, 2014 at 7:29 PM
    Permalink

    Hi Soubhagya,
    I have an house (2 floors with 3 houses) and a home loan active. Recently purchased an apartment and a home loan jointly (myself and my wife). I stay in a rented house in different place in same city.
    Now when doing the income from house property should i show the rent from all the 3 houses and half of rent from apartment? or can i show income from 2 houses + half of rent from apartment? I have rental agreements for all 3 houses + joint rent agreement for apartment.
    Thanks in advance.
    Regards,
    Prasanna

    Reply
    • April 14, 2014 at 8:52 AM
      Permalink

      Hi Prasanna,

      You mentioned you have already 3 houses (2 floors). In this case you need to consider them as 3 separate units for calculation of Income from House Property. Any income from the joint property has to be divided between you and your spouse along with interest on borrowed capital needs to be allocated based on your respective ownership for deduction purpose.

      Reply
  • April 6, 2014 at 11:39 AM
    Permalink

    Hi!.

    I have two house properties in Hyderabad which are let out. I am staying in Mumbai. Can I claim one of the properties at Hyderabad as self occupied, even though I receive rent on it?

    Reply
    • April 6, 2014 at 12:48 PM
      Permalink

      Hi Gopi,

      Fyi, if you own two houses then you get the option to show one as self-occupied and another as deemed to be let-out. But in your case you are getting rental income from both the houses so you will be taxed for the income received from both the houses.

      Hope I clarified your query. Cheers!

      Reply
  • April 6, 2014 at 11:39 PM
    Permalink

    Hi Soubhagya,

    Thanks for the details on the article, it clarifies a lot !!

    I have one question: I bought a flat in a Hyderabad and stay on rent in Delhi for job purpose. I got the possession of the flat around mid-march’14. I understand that I can consider this property as let-out and claim 100% interest deduction (please correct me if this is wrong) but I also need to consider the notional rent. Now, as I got possession only in March’14, will I have to consider notional rent for entire 12 months of FY14 or since it was just 15 days before the FY end, notional rent will be zero.

    Thanks
    Prashant

    Reply
  • April 8, 2014 at 2:28 PM
    Permalink

    I am staying and working in Delhi and bought a house in Hyderabad in 2009. I have got the possession in March 2014. As this is the only house I own but is out of my current city, can I claim exemption on 100% interest paid (approx 3.5 lakhs) or will I have to show it as self-occupied house.

    Reply
    • April 9, 2014 at 7:40 AM
      Permalink

      Hi Prashant,

      Since this house is located in another city where you neither stay nor work, so you can very well claim 100% interest deduction paid towards borrowed capital. Since you got the possession during March 2014, you can have 100% deduction for the FY 2013-14 (by showing it let-out with 1 month notional rent) along with 1/5th of total interest that you had paid since you have taken the loan and upto March 2013. You can avail such pre-construction interests for 5 assessment years.

      Reply
      • April 14, 2014 at 3:17 PM
        Permalink

        Thanks a lot Soubhagya !

        Regards
        Prashant

        Reply
        • April 14, 2014 at 6:13 PM
          Permalink

          You are most welcome Prashant.

          Reply
  • April 9, 2014 at 1:48 PM
    Permalink

    I own two apartments in bangalore. Apt1: rented for 20000pm. Interest paid currently is 1.5L/year. The second apt is purchased last year as it has more amenities and suits our needs. The EMI i pay is 1.1L/ month. Which is the best way of showing them in my IT declaration and later in returns?

    Reply
    • April 10, 2014 at 8:53 AM
      Permalink

      Hi Megha,

      Though I see, the best way to reduce tax liability is, by showing current residence as let-out and other one (where interest paid is 1.50Lacs) as self-occupied, but this will not be a right advice as per IT rules, since in actual scenario you have rented the house and receiving rent out of it (means it is not a vacant property). Thus you have to go as per the actuals.

      Reply
  • April 9, 2014 at 5:41 PM
    Permalink

    Hi Soubhagya Kumar Patra
    I need your expert Advice.

    I had got a flat registered in 2013 December. The Flat was ready a occupy and I got the complete flat to use by March 01 2013 from the builder. Then I had let it for Rent. I am staying in Bangalore and my newly purchased flat is also in Bangalore.

    Here are the Points:
    1. Flat got registered on Dec 2013.
    2. From December 2013 I am paying the EMI for 51500.00 INR
    3. I had not declared the flat purchase in the last year (Dec 2013 to Mar 2014) income tax declaration. It was just my HRA in declaration.
    4. Still now I am staying as a tenant in Rented house paying 32500.00 as Rent.
    5. I had rented my new Flat for 8000.00 /Month of House Rent.

    Now I need to make a IT declaration and I am aware of only declaring the HRA as 32500.00.

    Guide me what should I enter under 1 and 2 based on the above data:
    Deduction Under Section 24 (Self Occupied Property)
    1 Interest on Housing Loan (Self-occupied property) ___________
    2 Loss / Income From House Property (Letout) ___________

    Also for last year I was paying EMI for Dec 2013 to Mar 2014 of 51500.00 per month and summing up to 206000.00Rs. Is there anything I can declare this year to get some tax benefit on the 206000.00Rs?

    Reply
    • April 10, 2014 at 11:12 PM
      Permalink

      Hi Karthik,

      While filing IT returns for the AY 2014-15 you can show the new house as let-out for the FY 2013-14 and take the claim of deduction of interest paid during the said financial year along with 1/5th total interest that you had paid upto 31st March 2013. You need to consider rent received/receivable amount since the property was ready to occupy and take 30% standard deduction from the rent income net of Municipal Taxes paid in any.

      Reply
      • April 11, 2014 at 11:50 AM
        Permalink

        Thanks Soubhagya Kumar

        Reply
        • April 11, 2014 at 7:59 PM
          Permalink

          You are most welcome Karthik.

          Reply
  • April 15, 2014 at 5:09 PM
    Permalink

    Hello Soubhagya Kumar Patra,

    your advise on the following pls,

    I am paying EMI for a house (second house which will be let out) which will be registered in my name by Nov 14. The total interest component of EMI for year 2014-15 is around 2,50,000.
    For IT declaration for year 2014-15,
    Can I avail entire amount of 2,50,000 as interest on housing loan?
    Assuming that i can get an rent of Rs 7000/month, can I show income from housing property of Rs 35,000 only (5 months, Nov 14 to Mar 14 ) or for the entire year (7000*12=84,000)?

    thanks in advance

    Reply
    • April 15, 2014 at 5:46 PM
      Permalink

      Hi Dinesh,

      Since you indicated the said house property will be let-out once it is ready to occupy, then in that case you can avail 100% deduction on interest paid towards borrowed capital, but net of rent receivable along with adjusting Standard Deduction of 30% and Municipal Tax paid if any.

      With regards to rental income, you can consider it 5 × Rs. 7,000 because the house will not be ready to occupy till end of October (if I understood it right).

      Reply
  • April 16, 2014 at 11:05 AM
    Permalink

    Thanks Soubhagya for your quick response

    Reply
    • April 16, 2014 at 11:07 AM
      Permalink

      You are most welcome Dinesh.

      Reply
  • April 21, 2014 at 2:06 PM
    Permalink

    Hi Soubhagya Kumar Patra, I have the following scenario. I am planning to construct an individual house on a plot that I own by taking a Bank Loan. After the completion of construction, I am planning to occupy the house along with my family although a portion of the same house will be let out for rental purpose. Event though the let out portion will be part of the same house, it will have it’s own separate entrance and will not be accessible from inside the other portion. In this case what are my options for tax benefit? Can I avail the entire interest paid under section 24B. Your reply would be greatly appreciated.

    Reply
    • April 21, 2014 at 3:29 PM
      Permalink

      Hi Venkat,

      Here, self-occupied and let-out portions will be treated as two separate units for the purpose of calculation of income from house property. The loan amount taken for the entire premises has to be divided among these two units. For self-occupied house property whatever principal you have paid (proportionately), you will be eligible for deduction u/s 80C upto Rs. 1,00,000 along with upto Rs. 1,50,000 as interest deduction u/s 24b as self-occupied property. For let-out portion you can claim only interest which has no limit, but upto the amount paid as per the ratio.

      Reply
  • May 11, 2014 at 11:44 AM
    Permalink

    Hey Soubhagya,

    Thanks for a great article!

    I am paying an interest of 3.5L for home loan.
    The house is currently self occupied and is >30Km away from my workplace.
    Can I rent it out to my parents and consider it as a let-out property??

    Appreciate your reply!

    Thanks,
    Yashwant

    Reply
    • May 12, 2014 at 1:20 AM
      Permalink

      Hi Yashwant,

      There is nothing stated specifically about the distance in KM in the rule book. The reasons has to be accepted by your employer and subsequently AO. In such case you can take 100% interest benefits for the interest paid towards borrowed capital after adjusting rental income.

      Of course yes! you can rent it out to your parents.

      Reply
  • May 12, 2014 at 12:41 PM
    Permalink

    if i have a house property which i have used for my business purpose for sometime and let out in the same year then under which head it will be taxable.. ??

    Reply
    • May 13, 2014 at 12:38 AM
      Permalink

      Hi Surya,

      Any income generated during the period used for business purpose you can show under the head on Income from Business & Profession and rest of the months it can be shown as Income under of the head of House Property.

      Reply
  • May 14, 2014 at 2:04 PM
    Permalink

    I own two apartments in Mumbai. I am staying in one of the properties which has been purchased out of loan on which my tax outgo is about Rs.12 lac per annum. I have shown the other property as self-occupied for which I have taken the current market rent (Rs. 4 lac per annum) as my income (though it is not let out). Can I consider that I have a loss on house property ( 4 – 12 = 8 Lac) and set this off against my salary/other income. What would be the situation if I let out the property and receive the same amount as rental income (instead of a notional rent as considered earlier) and can I still consider there is loss on house property.?

    Reply
    • May 16, 2014 at 12:07 AM
      Permalink

      Hi Sivaram,

      Since you own two houses, you can decide on as self-occupied and another as let-out. In such case you can choose the house property with higher loan interest outgo as let-out to claim max benefits of deductions after adjusting notional rent income from the said property.

      Reply
      • July 14, 2014 at 2:02 PM
        Permalink

        Thanks Soubhagya for your reply. If I show one of the property as self-occupied (there is an interest outgo of Rs.12 lac) and the other as rented out, can I show the loss on self-occupied property for the entire interest amount?

        Reply
        • July 14, 2014 at 2:14 PM
          Permalink

          Hi Sivaram,

          If other property is not really let-out then you may show current house as deemed to be let-out and other one as self-occupied.

          Reply
  • June 5, 2014 at 8:20 PM
    Permalink

    i am having a property in the name of myself and my wife. We both are working and the house loan is also joined name. i am in the 20% tax bracket and my wife is 10% tax bracket. Is it possible to show 100% house loan intrest on my name and the 100% income from house property to my wife name so that we both need to pay 10% tax.

    Reply
    • June 6, 2014 at 8:55 PM
      Permalink

      Hi Raveendran,

      Thinking is good, but it is a bad idea 🙂 In the eyes of IT, it will be treated at “Tax Evasion”. You both should declare income and interest basis ownership of the property at least.

      Reply
  • June 7, 2014 at 11:11 PM
    Permalink

    Hi soubhagya,
    I have two houses, one of which is rented out. Both houses are co owned by me and my wife. Loan on both houses is entirely from my salary account. I and my wife show half half rented income from rent out house. But as I am the one who is repaying loan , the tax benefit for loss of income on rented out is taken by me. For self occupied I take the benefit of 1.5 l interest as well . Wife files income tax her income is in 10% bracket and mine is in 30 % bracket of income tax. Pls do guide me if I am doing it correctly. Some people do advice to sign a agreement between me n my wife stating that I will be paying the entire home loan on rs 100 stamp paper.
    Rgds mm

    Reply
    • June 7, 2014 at 11:25 PM
      Permalink

      Hi MM,

      If your wife is showing half of the rental income then she should show half of the losses from the house property as well.

      Whoever has suggested about stamp paper has forgot to mention that, if there is an agreement between husband & wife that husband will claim entire interest as he his the only who is serving loan then he needs to show entire rental income under his heads of income and pay tax accordingly.

      Reply
  • June 8, 2014 at 3:29 PM
    Permalink

    Hi Soubhagya.
    Does your suggestion apply to situation where the loan amount was actually 60 % of the value of house when bought. Does it mean that tax return doesn’t have any consideration for % of loan taken on house property. For example the loan was only 10% of house value but still the rent and tax rebate on interest of loan has to be either total or split as suggested by you?
    Thanks n rgds MM

    Reply
    • June 8, 2014 at 4:16 PM
      Permalink

      Hi MM,

      It doesn’t matter what percentage is the loan amount out of total house value. The very simple thing is, if one is claiming losses from an activity then he/she has to show income from the same activity both either fully or partially ( if multiple persons need to claim). Logically whatever percentage of income (out of total income) is being shown, the same percentage of loss (out of total losses) has to be claimed.

      Reply
  • June 24, 2014 at 7:55 PM
    Permalink

    Hi Mr. Soubhagya,
    Is interest/ penalty on house tax allowable as deduction under section 23 while computing the Gross Annual Lettable Value?

    Reply
    • June 27, 2014 at 8:08 AM
      Permalink

      Hi Sanchit,

      Any interest/penalty paid on house tax is not allowed.

      Reply
  • June 25, 2014 at 4:08 PM
    Permalink

    Hi Soubhagya,

    I have some queries which I would request to clarify

    1. I own two apartments and both have a housing loan on my name. One of them is self occupied while other property is vacant as of now. My question is, will the second property be considered as a let out property by default if it is not self occupied? If yes, can I show income from let out property as nil and claim tax exemption under section ‘Interest on housing loan for the let out property’ and Interest On Housing Loan (self occupied property)
    separately?

    2. If I do let out the second property from the month of July 2014 for instance, Do I have to declare the total actual annual rent in my income & investment declaration or only the total rent amount receivable up to March 2015?

    3. The total annual interest component for 2014-15 of my self occupied property is close to INR 90000 so if the first scenario isn’t possible, can I combine the interest components of the two loans and claim full 150000 exemption?

    Any help would be appreciated. Thanks in advance.

    Reply
    • June 27, 2014 at 8:46 AM
      Permalink

      Hi Purshottam,

      Find answers in sequence to your queries;

      1. Yes! the vacant property will be treated as let-out, but you can not show NIL income out of it. You need to show notional income and pay tax (if any) after adjusting municipal tax, standard deduction and loan interest. So, it is better to let it out instead paying tax for an income that you have not actually receiving. What to do, this is a plight 🙂

      2. If your property was very much lettable before July 2014 (assume it is by April 2014) and you are putting it for rent on July 2014 onwards then you have to add notional rent from April 2014 till July 2014 with the actual rent received/receivable from July 2014 upto March 2015.

      3. One should be as self-occupied and other as let-out or deemed to be let-out.

      Reply
  • June 25, 2014 at 4:49 PM
    Permalink

    We know, The maximum limit of Self occupied house is 1. But my question is if both husband and wife both have 2+2= 4 Flat. Than how to compute this? If we can take 1+1 flat as self occupied for both of them??

    Reply
    • June 27, 2014 at 8:18 AM
      Permalink

      Hi Sandhya,

      Both husband and wife are supposed to stay together, in such case 1 house (either of husband or wife) can be treated as self-occupied and all rest as let-out or deemed to be let-out. In any case both the spouses are staying apart (may be due to job location), then each them can show one of their houses as self-occupied and other as let-out or deemed to be let-out.

      Reply
  • June 30, 2014 at 5:11 PM
    Permalink

    Hi,
    My query is that if a house is co-owned by a husband and wife in 50:50 ratio but the municipal taxes are paid only by the husband, how will that affect the calculations? They pay interest on borrowed capital in 50:50 ratio.

    Reply
    • July 1, 2014 at 3:03 PM
      Permalink

      Hi Mamnvi,

      No worry! both Husband & Wife can claim 50:50 if they want.

      Reply
  • July 1, 2014 at 12:45 PM
    Permalink

    I propose to buy a flat jointly with my spouse. Because my take home pay is 3 times my spouse, I wish to own 75% of the flat while my spouse will own 25%. Should I clearly mention the proportion in the contract with the builder?Will the bank give to separate loans to myself and my spouse? If not, will the bank issue separate interest certificates to myself and my spouse or will they issue only one certificate. If only one certificate is issued, can we split it in 75:25 basis and will the ITO accept this split based on a single certificate from the bank?

    Reply
    • July 1, 2014 at 3:18 PM
      Permalink

      Hi Sathasivam,

      All concerns one solution would be, mention clearly in the contract. Post this you can claim all deductions as per your wish even if bank doesn’t give separate loan or interest certificate (if they give joint loan & interest certificate).

      Reply
  • July 2, 2014 at 1:29 PM
    Permalink

    Hi Soubhagya,

    Thank you for your previous response. In continuation with my previous query, lets consider two properties as Property A and Property B.

    Property A is self occupied and annual interest component on it is 87000
    Property B has been let out from July 2014 at a monthly rent of 8500 and its annual interest component is 237000

    Can I declare Property B with higher interest component as self occupied even though I occupy Property A in actual.

    As per the norms, I can get exemption up to 150000 on the interest paid on self occupied property but in this case, I stand to lose out (150000 – 87000 = 63000 deficit) if I declare Property A as self occupied .

    Will it be okay if I declare Property B as self occupied and claim full 150000 interest benefit on it with the Property A declared as let out? The scenario then would be as follows – Annual rent received 8500 x 12 = 102000 – 30% standard deductions (30600) – interest paid on it (87000)?

    Also, the principal amount repaid on both properties amounts to approx 85000. Can both the amounts be combined and claimed under section 80C exemption which is 1 lakh?

    Please correct me if I am wrong and guide me with the correct way to declaration.

    Reply
    • July 2, 2014 at 1:37 PM
      Permalink

      Hi Purshottam,

      Your idea, understanding and calculations are correct, but the bad news is; you have to show Property B as let-out because the same is let-out in actual (not a vacant property). Showing this (Property B) as self-occupied and none payment of tax on the actual rent received will be treated as tax evasion.

      Reply
      • July 2, 2014 at 2:06 PM
        Permalink

        Thanks again Soubhagya. That cleared up my confusion. So property B has to be declared let out and calculation would be as follows – Annual rent received 8500 x 12 = 102000 – 30% standard deductions (30600) – interest paid on it (237000). So in effect no tax would be applicable on the rent income received right?

        Also one last query, the principal amount repaid on both properties amounts to approx 85000 annually. Can both the amounts be combined and claimed under section 80C exemption which is 1 lakh?

        Reply
        • July 2, 2014 at 2:16 PM
          Permalink

          That’s right Purshottam.

          Regarding deduction of principal repayment, you can only consider from Self-Occupied property. Any payment done by way of principal repayment towards loan on let-out property will not be eligible for deduction u/s 80C.

          Reply
  • July 2, 2014 at 2:21 PM
    Permalink

    Dear Sir,
    I have sold out one property on Jun 3013 and showing the LTCG. To get the deduction of LTCG
    I have purchased one under construction property and the sale deed happened on March 2013, but the possession not got and will be getting in August 2014,
    then
    1) can I mention the same property for Long Term C Gain deduction under clause 54 in the FY 2013-2014 , this property not got Completion certificate from Muncipal corporation.
    In short, is it necessary to have the possession of the flat (completion Certificate) to show as deduction under 54 against the LTCG, as I am having paid all 100% amount on sale deed happened date of 14/03/2014.
    2) To claim the 1/5th Interest portion as EMI is started, the sale deed document is sufficient and no need to show the letout notational rent, as this is my second property.
    Thanks in advance.

    Reply
    • July 3, 2014 at 10:32 AM
      Permalink

      Hi Santosh,

      Seems there is a typing mistake. Sale date is mentioned as June 3013! Should I consider June 2013? Is so, then any gains out of sale should be considered long term capital gain if your sale transaction has happened after 3 years from the date of purchase (I believe you are aware of this).

      If you are investing LTCG amount in an under-construction house then it should complete in 3 years from the date of sale of first property. Even any purchase of residential house property prior to 1 year of sale is also accepted. In your case both the conditions are satisfied, thus your investment amount on new house property is very much allowed as deduction for FY 2013-14. And it is not necessary to show completion certificate (you won’t get it until construction is completed) to claim deduction u/s 54, but you need to ensure it is received within 3 years as stated above.

      With regards, to 1/5th interest deduction; the same will be allowed only after construction completed.

      Reply
  • July 3, 2014 at 1:05 PM
    Permalink

    I purchased a house and paid housing loan during construction period. As per rule the interest paid during the construction (before possession) can be claimed in five installments while filing return.

    How do I show this in the ITR-1 form? I am filing return online.

    Thanks
    Pravat

    Reply
    • July 3, 2014 at 9:30 PM
      Permalink

      Hi Pravat,

      Add 1/5th of the pre-construction interest paid with the interest paid during previous financial year and enter as negative (-ve) value under Income From House Property.

      Reply
  • July 3, 2014 at 6:15 PM
    Permalink

    Hi Rahul,
    My wife and me are the co-owner of house in Pune and are working in Bangalore
    My wife’s income last year is below 1.5 lakhs, as she took service break for 9 months.
    The rent agreement was made on her name and I receive rent in my account for convenience.
    As I understood from your previous posts that I have to show Co-ownership in both rent received AND Interest payable on capital borrowed and it cannot be different.
    Queries:-
    1) Whether it will be okay to show 99% my share in both Rent and Interest? Even though this is not most beneficial situation for me.
    2) In this FY, My wife has again started earning, will I be able to change the ratio to say 50-50% in that case.
    3)Which ITR form we both should fill? ITR-1 or ITR-2?

    Reply
    • July 3, 2014 at 9:46 PM
      Permalink

      Hi UD,

      Let me answer to your query on behalf of Rahul (though I don’t know who is Rahul here :-)). Answers are in sequence to your queries;

      1. My doubt is why not 100%? Anyways, 99% thing may work.
      2. It may not directly linked to her earnings. Is she contributing? How much? Then go as per the proportion of contribution done by her. But remember, if there are frequent variation of such ratios every year, then you are certainly making a chance to get invitation from AO to justify these.
      3. May be below link will address this query;
      http://www.succinctfp.com/index.php/know-which-itr-form-is-applicable-for-you-to-file-returns-avoid-mistakes/

      Reply
      • July 21, 2014 at 7:30 PM
        Permalink

        I have the same case, I have been claiming 100% of the interest and the rental income of a joint property with my wife. But, I realized that ITR-2 doesn’t allow filling 100% as percentage of share in the Schedule HP of House Property if I claim the property to be co-owned. And as soon as I select the share to be 50% it allocates only 50% of the rental income, but it still allocates the 100% interest in the computation.

        How should I fill the form?

        Reply
        • July 29, 2014 at 10:38 PM
          Permalink

          Hi Nitin,

          These are cases of exception. You need to put as 100% owned. But this has to be clarified later in case any requirement arise from AO.

          Reply
  • July 8, 2014 at 1:30 PM
    Permalink

    Hi Soubhagya,

    My parents have rented out their house to a tenant. They are joint owners (50-50). The tenant pays rent into my fathers bank account.
    Now my query is – whether my father should transfer 50% of the rent into my mothers bank account to show her income?
    Should the amount be exact 50% or should he or can he reduce the maintenance costs + 30% standard deduction amount and then transfer 50% of the balance amount?

    Thanks a lot

    Reply
    • July 9, 2014 at 9:30 AM
      Permalink

      Hi John,

      To bring a better clarity, let your father transfer exact 50% share of your mother to her account. While they file their respective income from house property, these deductions can be adjusted accordingly.

      Reply
  • July 9, 2014 at 12:13 AM
    Permalink

    what if the let out house if vacant for whole year and actual rent received is nil?

    Reply
    • July 9, 2014 at 8:46 AM
      Permalink

      Hi Yograj,

      Even then you have to pay tax on notional rent.

      Reply
  • July 14, 2014 at 1:23 PM
    Permalink

    Sorry for commiting cardial mistake of writing wrong name Mr. Soubhagya Kumar Patra !!.
    Thanks for clarification.
    I have now releasied that i have one more house on my name that is currently occupied by my parents.They do not give me rent as they are dependent on me. So how should i consider income from housing property?

    Reply
    • July 14, 2014 at 2:11 PM
      Permalink

      Hi UD,

      Since you own two houses, then you have the opportunity to show one as self-occupied and another as let-out (deemed to be let-out) and pay tax on notional rental income, but you can’t show both as self-occupied to avoid tax which may arose due to notional rent.

      It’s upto you, which one you wish to show as let-out or self-occupied.

      Reply
      • July 14, 2014 at 4:52 PM
        Permalink

        Hi Mr. Soubhagya Kumar Patra !!.
        I will explain the scenario better , I stay in rented apartment in bangalore. I have 2 own houses in 2 different cities. One is let out for which i am paying interest on borrowed capital.
        2nd home which is in my small population hometown is currently occupied by my parent. They do not give me rent. and its loan is completely paid off.

        so can this 2nd home can be shown as self occupied home? or i have to notional rent?

        Reply
        • July 14, 2014 at 6:14 PM
          Permalink

          Hi UD,

          You can show only one house as Self-Occupied.

          Reply
  • July 16, 2014 at 4:09 PM
    Permalink

    I have 2 properties (not self occupied).
    Total Annual Income from 1st property on rent = 84,000
    Total Annual Income from 2nd property on rent = 0 (not on rent)
    Both properties are on loan.
    Interest paid on 1st property = 60,000.
    Interest pain on 2nd property = 2,00,000.
    How much is net income and tax applicable on this?

    Reply
    • July 17, 2014 at 12:34 AM
      Permalink

      Hi Jay,

      Net income and applicable taxes can be figured out when all other income like, salary, other sources etc are known. If I assume 2nd property is self-occupied then for FY2013-14 you can claim only 1,50,000 as deduction and 1st property after standard deduction and interest it will be a loss of Rs. 1,200. Total loss from house property would be Rs. 1,51,200.

      Reply
      • July 17, 2014 at 10:56 AM
        Permalink

        Thanks Soubhagya. 2nd property is just vacant and not self occupied as I am staying in father’s house. Then will that change tax? If yes, how?

        Reply
  • July 17, 2014 at 4:57 PM
    Permalink

    I was in UK for last three financial years and did not fill up IT return in India, as there was no income. May I include the previous three years home loan amounts for IT deduction under 24 and 80C this year. I’m filling return this year. Thank you for your quick reply.

    Reply
  • July 17, 2014 at 5:00 PM
    Permalink

    I was in UK for last three financial years and did not fill up IT return in India, as there was no income. May I include the previous three years home loan amounts for IT deduction under 24 and 80C this year. I’m filling return this year. Thank you for your quick reply.

    Reply
    • July 17, 2014 at 5:16 PM
      Permalink

      Hi Sudip,

      No! It is not allowed. But you may file returns for those previous financial years and take deduction.

      Reply
  • July 17, 2014 at 11:43 PM
    Permalink

    I am still confused …Soubhagya Kumar Patra
    I am staying in Rented apartment A in City A- Claiming HRA for same
    I have first house B in City B where my parent as staying i receive zero rent – I am showing it as self occupied Rent=nil and don’t have any loan on it
    I have IInd home C in city C, Which is rented out and i am showing it as let out.

    Will showing house B as self occupied and Rent=o is a problem?

    Reply
  • July 21, 2014 at 11:42 AM
    Permalink

    Hello,
    I own an apt in Bangalore, but live in a rented place in an adjacent building. My parents live in the apt I own. They themselves own an apartment in another city, which is vacant as they are here now.
    Can you please let me know:
    – if I can claim HRA ?
    – What am I supposed to do about this fact in general in my tax filing (rent/loss etc? )

    Kindly help.
    -Satya

    Reply
    • July 21, 2014 at 5:38 PM
      Permalink

      Hi Satya,

      It’s in same area/locality!! Claiming HRA may not be a safe idea.

      Reply
  • July 21, 2014 at 2:46 PM
    Permalink

    My newly possessed flat was not occupied from Date of Possession 20.02.2014 to 31.05.2014. But in my tax proposals last FY, I had informed that I would receive a rent of Rs. 5000/- but failed to let out during that short period. So does it comes under Self occupied or a Let-out one. I am still in company quarter and paying perquisites. Property and me are in same city. I am not bothered about taxation of that Rs. 5000/-.
    Rented from 01.06.2014 with Notorised Agreement.
    What should I write in the name of Tenant in the House Property sheet of ITR2.

    Reply
    • July 21, 2014 at 5:49 PM
      Permalink

      Hi Chandra,

      Many a time people in such situation show the property as let-out with 3-4 months rent even though there was no problem in occupying the house as soon as it was read to take. But again this depends on how assessing officer look at your case (in case scrutiny arises). The safe option many be upto Feb 2014 you take HRA benefits/whatever perquisite you are paying, but for March show as self occupied and take Rs. 1,50,000 interest deductions.

      Reply
  • July 22, 2014 at 2:28 PM
    Permalink

    Hi Soubhagya,

    1. Are saying its not legal?
    2. If so, what are my other choices? What should my parents do for taxes?
    Can as a family we save anything? After all, inspite of having an apt (in another city), no one is living in it, and I am ending up paying rent. Can you pls advice what are my options to save tax ?
    thanks,
    -Satya

    Reply
    • July 22, 2014 at 11:16 PM
      Permalink

      Hi Satya,

      It may not be right or may not be allowed by AO in any case scrutiny comes. If you are lucky it may pass through and that is why many people looking this as a choice.

      The right as per rule is, you have to show Bangalore house as self-occupied and leave HRA exemption benefits.

      Reply
  • July 23, 2014 at 2:46 PM
    Permalink

    Hi Soubhagya
    I own two houses (one is rented out in same city, second is ready but vacant outside the city) but I am staying in rented property. Can I claim all three-four benefits i.e. 1. Principal repayment of 1st home loan (80C) & 2. interest amount under section 24; 3. interest amount of second home loan under section 24 & 4. HRA.
    Thanks in advance
    Sameer

    Reply
    • July 23, 2014 at 11:54 PM
      Permalink

      Hi Sameer,

      It is not always a good idea to take benefits of HRA exemption for rent paid in the same city where you own a house property. You may consider one house as self-occupied and another as let-out which is located out-side the city.

      Reply
  • July 24, 2014 at 10:30 AM
    Permalink

    can any one clarify my Query plsss…
    i have one client, he let out house property for which he and his wife are co owners,rental income is directly recieved in his wifes account,,he has one loan ,,and he is paying total interest ,,can interest paid by him can be allowable in proportion?
    thanks in advanceeee……!!!

    Reply
    • July 24, 2014 at 2:02 PM
      Permalink

      Hi Varahala,

      It is immaterial in whose account rental income comes as long as the property is jointly owned (I just assumed it is owned jointly). In such case your client can show house property as co-owned (specify percentage of sharing), then take proportionate deduction of interest paid on borrowed capital & adjust net rental income in the same manner of his share. Don’t forget, his wife also needs to file IT returns to show these incomes and respective deductions. Hope I clarified your query.

      Reply
  • July 27, 2014 at 10:39 PM
    Permalink

    While showing notional rent income, ITR-2 needs tenant name, what name should I enter there?

    Reply
    • July 28, 2014 at 8:08 PM
      Permalink

      Put “NA”.

      Reply
  • July 28, 2014 at 9:48 AM
    Permalink

    Questions are on Second flat:
    1) Is there method to calculate notional rent, is there guide? is it depend on Location? property is vacant all the time how to calculate it?

    2) year 1: Property was vacant notional rent is shown as Rs 5000
    Year 2: Property was rented for Rs 10000
    Year 3 : now its vacant for 1 year, How to calculate notional rent if property is vacant for a 1 year, it should be 5k or 10k?

    Reply
    • July 28, 2014 at 1:24 PM
      Permalink

      Hi Sarang,

      If you really get Rs. 10,000 as rent then you should take Rs. 10,000 as notional rent if the same is vacant, not Rs. 5,000.

      Reply
  • July 29, 2014 at 12:08 PM
    Permalink

    Hi Soubhagya,
    I got possession of my flat on March 31st last year. I have paid around 215000 as interest and around 13000 as principle. Also, I had paid around 100000 as loan interest in previous financial years (2012-13). Can I claim 1/5th of previous years (2012-13) interest and last year’s full interest considering it as the let out property?
    As I got possession on 31st March only, I can show nominal rent for 1 day.
    Also, can I claim the principal of 13000 for 80C tax rebate?

    Reply
    • July 29, 2014 at 9:53 PM
      Permalink

      Hi Kanak,

      It is considered to be during FY 2013-14, then you may take interest benefits for deduction during the said FY. Even you can claim 1/5th of pre-construction interest paid for FY 2013-14, but I can’t say anything certain with regards to days of notional rental income. One month rental income can be taken for this purpose. Moreover, if the said property is going to be shown as let-out, then you can not claim 80C benefits for principal repayment.

      P.S. Such an edge case takes more time for process of ITR. Even there are chance that AO call for clarification, so you be ready for this.

      Reply
  • July 29, 2014 at 2:10 PM
    Permalink

    Hi Soubhagya,
    I am facing the following issue in filing the return for this year.
    1. If I got possession of flat on last date of financial year (31/3/2014), can I claim full interest for the year considering the property as deemed let out and reducing the notional rent of 1 day?
    2. Can I claim the interest of previous financial years too (dividing it into 5 parts and claiming them for 5 consecutive years)
    3. Can I claim the principal paid in the last financial year in 80C if I consider it as let out property?

    Reply
    • July 29, 2014 at 10:00 PM
      Permalink

      Hi KK,

      It is considered to be during FY 2013-14, then you may take interest benefits for deduction during the said FY. Even you can claim 1/5th of pre-construction interest paid for FY 2013-14, but I can’t say anything certain with regards to days of notional rental income. One month rental income can be taken for this purpose. Moreover, if the said property is going to be shown as let-out, then you can not claim 80C benefits for principal repayment.

      P.S. Such an edge case takes more time for process of ITR. Even there are chance that AO call for clarification, so you be ready for this.

      Reply
  • August 1, 2014 at 5:14 PM
    Permalink

    I have a Flat in delhi, on which there no balance loan/interest payable & is lying vacant currently.
    I would be getting possession of a flat ina month’s time which has been purchased against a bank loan & bears an installment of around 23000 pm besides interest of Rs 2,00,000 Per annum.I get an HRA of Rs. 21000/- pm from my company.I have the option of occupying one of the houses & give the other one on rent.From I tax point of view, which of the houses should be occupied by me?What deductions can be availed by me against HRA received?
    Can I give the other house to my adult son & daughter & collect rent from them & issue rent receipts to them individually?What deductions can be availed by me in that case?

    Thanks for your quick response

    Reply
    • August 1, 2014 at 9:57 PM
      Permalink

      Hi Atul,

      You may consider the house which is under loan as deemed to be let-out. Once you occupy your own house you should not be eligible to take benefits of tax exemption on HRA.

      Reply
  • August 5, 2014 at 8:06 PM
    Permalink

    Dear Sir/Madam,
    I have 2 homes.
    1st is self occupied and i am claiming 2 Lakhs (interest) and principle amount under section 80C and I am clear with self occupied house.

    2nd home is vacant, but it will be under let-out section. and interest i am paying is 2,67,000 p.a

    My question is:
    how do i calculate loss from let-out property and publish the figure (some XXXX amount) in front of loss section.
    Please advise

    Reply
    • August 6, 2014 at 4:56 PM
      Permalink

      Hi Sandeep,

      Assume the Gross Annual Value as Rs, 1,20,000 basis standard rent. You need to deduct Municipal Taxes Paid (assumed Rs, 5,000), then Net Annual Value arrives Rs. 1,15,00 and deduct 30% Standard Deduction. Now you need to deduct interest paid on borrowed capital (i.e. Rs. 2,67,000). Finally the loss from the house property (which is deemed to be let-out) would be [Rs. 2,67,000 – (Rs. 1,15,000 × 30% of Rs. 1,15,000)] i.e. Rs. 2,32,500.

      Now add Rs. 2,32,500 with Rs. 2,00,000 interest paid on Self-Occupied house property to show in front of loss section you indicated or show separately under Self-Occupied and Let-Out section.

      Please note, stated value for Standard Rent and Municipal Taxes are only assumed figures.

      Reply
  • August 12, 2014 at 3:29 PM
    Permalink

    hi
    I took posseion of house in dec2013 and it was not for self occupation. it was not rented out for the next three months (i.e till march 2014) , however i paid society maintenance charges and municipal taxes for the three months. Pls let me know what will be NAV and will 30% deduction will be applicable?

    thanks

    Reply
    • August 12, 2014 at 8:18 PM
      Permalink

      Hi Seema,

      Info is not enough to answer. Depending on the situation whether you own any other house properties or this is the sole property you have then only it can be said whether the same can be treated as self-occupied and let-out for the previous financial year.

      Reply
  • August 20, 2014 at 1:18 PM
    Permalink

    Hi,
    I have a property in a small town and my parents lives in that house. I have spent around Rs. 2,00,000(haven’t taken any loan for this) for maintenance of the house. Now, I want to claim that amount for tax deduction under “Computation of Loss / Income from let out property”.
    Could you please advise how can I claim the same and what documents do I need to produce as the proof.
    Thanks in advance.

    Reply
    • August 21, 2014 at 9:47 AM
      Permalink

      Hi Poornima,

      Since you indicated, you do not have any loan on the said house property, then I don’t think there is anything to claim as deduction. Btw taking home loan again to take such exemptions will not be a good idea.

      Reply
      • August 21, 2014 at 1:11 PM
        Permalink

        Thanks Soubhagya. However, I wanted to understand that, can’t we claim that amount(Rs. 2,00,000) under “Loss on Self-Occupied house property (Housing loan interest)”.

        |Thanks|

        Reply
          • August 21, 2014 at 6:48 PM
            Permalink

            Thanks Soubhagya for prompt response and clearing the query.

  • August 23, 2014 at 6:18 PM
    Permalink

    Hi Sir,

    Your lucid resolutions encourage me to put up my query which, few consultants I spoke to sought to solve in an unprofessional way, something I do not wish to do. It concerns computation of income from house property.

    I have two flats in two different towns (Flat A) and a very small on(Flat B). Till now, Flat A was let out and the income was regularly being returned by me and tax paid. Flat B was being considered to be self-occupied or the one which could not be occupied for reason of posting elsewhere ( I work at a different place and live in accommodation provided by my organisation at nominal rent). The lossclaimed on account of interest paid on borrowed capital is around 1.00 lac. The Flat A has been vacated since 1st June, 2014 and I wish not to let it out, as I have to move in and reside therein since 1.4.2015. I assume that the following course of action is now called for as far as Income Tax for FY 2014-15 is concerned:-
    a) Rental income for April and May for Flat A would be returned and tax paid after appropriate SD.
    b) From June onwards the house shall be considered to be self-occupied without any income involved (though I propose actually moving in since 1.4.2015).
    c) Flat B shall be deemed to be let out, as benefit of Section 23(2)(a) would not be available on more than one houses. The process for computation of gross annual value for this purpose is rather complex, as I do not know how to ascertain fair rent, market rent, municipal value, etc. required for the purpose. Is it okay if I take Rs.2000.00 PM as reasonable expected rent (my enquiries have revealed that similar tenements are being let out at this rate) ? Also, I propose to do this for 10 months beginning 1st June, since when rental income flat A has ceased to accrue.
    d) In one of the books (Taxmann’s DT Ready Reckoner 35th Edition) para 40.1-4, it is stated that where a house is self-occupied for a part of the year and let out for remaining part of the year, the benefit of Section 23(2)(a) is not available and income will be computed as if the property is let out. This defies logic as well as common sense or I have wrongly understood the provision. It is hard to believe that one will have to pay tax on rental of Flat A for full year despite the fact that it remained let out for two months only. Perhaps, the provision is for an eventuality where there is only one house, but even in that case for the period a person has taken occupation and tenancy has ceased to exist why should exemption be discontinued.

    I shall be grateful for your kindly helping me in adopting a correct course of action that is correct as well prudent from the point of view of tax saving.

    Thanks and regards,

    Rajesh Mohil

    Reply
    • August 25, 2014 at 11:04 PM
      Permalink

      Hi Rajesh,

      A. Correct
      B. Since you are considering flat “B” as self-occupied then how are you going to claim flat “A” also self-occupied? As per me, from June till March it will have unrealised rent for the purpose of rental income calculation.
      C. Ok got it! But I suggest you to keep Flat “A” as let-out (with June to March rent unrealised) and let Flat “B” as Self-Occupied for FY 2014-15.
      D. Author is right as indicated in the book. But as I mentioned Flat “A” could be let-out for full year, but in case of vacancy during the part of the year the you may get the benefits of deduction for the portion of unrealised rent from the rent declared for 12 months (including notional for the vacant period).

      Please note: Since you are keeping Flat “A” vacant intentionally, you might end up paying tax on unrealised rent as per notional rent.

      Reply
      • September 2, 2014 at 10:33 PM
        Permalink

        Dear Sir,

        In fact, the tenant left before the agreed period leaving the flat A vacant. As I intended moving in after March, 2015, it has not been let out for such a short period. If flat B is to be declared as self occupied as suggested by you, as hitherto and Flat A as let out, do you mean it would be alright to declare rent for only two months (actually received too) for the full financial year and show the remaining 10 months as vacancy.
        Kindly tell how exactly to go about it.

        Thanks

        Rajesh Mohil
        deemed to be let out, notional rent of around

        Reply
  • August 28, 2014 at 9:49 AM
    Permalink

    Hi,

    I own a property where I stay on one floor and have given one floor on rent. I do not want to claim benefits of self occupied property (1 Lac Principal & 1.5 Lacs Interest); so can i claim interest deduction (complete interest paid over a period of Financial year) and claim Income from Property.

    I want to carry the above because my interest component for property is too high and claiming Rs.1,50,000 as Interest deduction is too low.

    Reply
    • August 28, 2014 at 5:46 PM
      Permalink

      Hi Raj,

      In that case, you will have to add same amount of income receiving for the floor (which is on rent) for the self-occupied house and pay tax. But I can’t confirm whether it is right to do.

      Reply
      • August 28, 2014 at 10:44 PM
        Permalink

        Hi,

        But what about waiver on interest component? As I want to claim waiver (in terms of complete interest amount paid to bank) on tax to be paid over income. For example. If I claim this to be self occupied then i get 1P & 1.5I wherein if I claim it to be rented which it is. I get benefit of 1P & 10Lacs (Interest paid to Bank). And getting later is more beneficial in terms of saving on tax to be paid.

        Reply
        • August 28, 2014 at 10:49 PM
          Permalink

          Hi Raj,

          For let-out house property you can get deductions for entire interest paid towards borrowed capital.

          Reply
  • September 17, 2014 at 3:14 PM
    Permalink

    At what rate the “Income from House Property” will be taxed ?? Is it depending on the tax slab in which all the incomes collectively falls ?? Say if salary income is 11 lacs p.a., plus rental income, then whether the rental income (as calculated) will it be taxed at 30% tax slab ??

    Reply
    • September 18, 2014 at 8:07 PM
      Permalink

      Hi Sundar,

      Net rental income is taxed at normal tax rate. If you are under 30% bracket then any additional net rental income would be taxed at 30% plus education cess.

      Reply
  • September 29, 2014 at 6:24 PM
    Permalink

    Hi Soubhagya,
    I am owner of an apartment, what if i stay in apartment for 7 months and will shift in Nov-2014 to some other city?
    My total interest payment for whole financial year is about 4 lacs.
    Rent I received for 5 months is (5*10000 = 50,000)
    So what is the outcome-
    1) I can claim 4 lacs as deduction under sec 24b and add 50,000 to my income
    2) I can claim 4 lacs as deduction under sec 24b and add 120,000 (annualized rent) to my income
    3) I can claim only 2 lac as interest deduction under 24b because i was occupying the property for part of the period

    Also if rent needs to be added to income, can I claim 30% standard deduction for maintenance of property?

    Reply
    • October 1, 2014 at 9:35 PM
      Permalink

      Hi Amit,

      It will be treated as house being let-out partly during the financial year and partly self-occupied. You need to figure out seven month’s interest proportionately out of Rs. 4Lacs and claim upto Rs. 2,00,000 as self-occupied; Rest five months will be treated as let-out, thus five month’s proportionate interest can be claim fully after adjusting 30% (standard deduction) of rental receipts with property tax paid if any.

      Hope I could answer to all your queries.

      Reply
      • October 7, 2014 at 2:35 PM
        Permalink

        Thanks a lot.
        This clarifies my doubt.

        Reply
  • October 7, 2014 at 2:44 PM
    Permalink

    I read following on one of the forum-

    >>Don’t revise for the heck of it! You could be penalized
    >>Revised returns are more likely to be chosen for scrutiny and if any omission is found
    >>purposeful, especially if income has been revised higher, you could be penalized with a
    >>fine or even imprisonment. If revised return is filed to correct a bonafide mistake then
    >>no penalty can be levied, otherwise it can be levied which could be 100 to 300 percent of
    >>tax dues. In case of concealment of income and furnishing of inaccurate information in
    >>income tax return an individual will be penalized under Section 271(1)(c)

    Is it true? I have some extra income from Derivatives and I totally forgot to include it when I filed the return. Now I want to report my true income honestly (i have not got any notice and I am doing it on my own). But after reading above stated paragraph, I am concerned.

    Reply
    • October 7, 2014 at 6:12 PM
      Permalink

      Hi Amit ,

      Who is he, saying conceal income or do not revise returns if your income were presented less in original returns?? 🙂 You won’t be penalised if you are showing correct income in “original” or in “revised” return. So what if scrutiny comes! At least you have all the true evidence to produce, right?

      I agree that revision should be ” to correct a bonafide mistake”.

      Yes! It is true that if you have filed IT returns without showing some/part of your income then penalty would be 100-300 per cent of actual tax liabilities for concealment of income along with not so good things as per the discretion of the tax officer.

      Bottom line is. File IT returns with all true income. Or revise your IT returns with all true income and pay additional tax liabilities if something has been missed while filing original returns.

      Reply
  • November 13, 2014 at 12:04 AM
    Permalink

    HI,

    I NEED YOUR HELP.I have registered my house property in Kolkata in June 2014. I live in ranchi in a rented accommodation and I will retire from here. My property in kolkata is for investment purpose and it is lying vacant since june 2014. I am paying almost 35 lacs home loan interest and not getting a single penny. I may have to pay munipal tax too. Please let me know what is the best tax rebate solution for this loss. Thanks a lot in advance.

    Srikanta Pal

    Reply
    • November 14, 2014 at 12:01 AM
      Permalink

      Hi Srikanta,

      You can show it as a no income i.e “Loss Due to Vacancy” and claim entire interest paid for the financial year. But in case, assessing officer doesn’t allow you to take advantage of NIL income receivables, then you have to apply notional rent, subtract municipal taxes and adjust interest paid. As per my experience, if your house is ready to be let-out and you have kept it vacant for no reason then notional rent things will apply.

      Reply
  • December 3, 2014 at 2:30 PM
    Permalink

    Hi Soubhagya,
    I am currently staying on rent. In Feb 2015, I will get possession of my house and plan to shift immediately. So,
    1) Can I claim HRA for rent paid from April 2014 to Jan 2015?
    2) Since I will be having self-occupied property for Feb and March 2015, can I claim home loan interest for complete FY 2014-15 plus 1/5th of Pre-EMI interest?
    Please advise.

    Sanjay

    Reply
    • December 4, 2014 at 8:43 AM
      Permalink

      Hi Sanjay,

      1. Yes! you can
      2. Yes! of course, but upto the limit specified for self-occupied house property i.e. Rs. 2,00,000 for the FY 2014-15

      Reply
      • December 5, 2014 at 9:07 PM
        Permalink

        Hi Soubhagya,
        Thanks for answering my query promptly. I must say that many people write good articles but few like you stay in regular touch with the readers by answering their queries.

        Sanjay

        Reply
        • December 6, 2014 at 10:54 PM
          Permalink

          Hi Sanjay,

          Thank you for appreciating!

          Reply
      • December 24, 2014 at 5:24 PM
        Permalink

        Hi Soubhagya,

        Sanjay can claim Housing Loan Interest/Principal deduction only for Feb-15 and Mar-15 if he claims HRA for Apr-14 to Jan-15. Here i assume, sanjay’s Housing Loan EMI is started prior to Feb-15 (say Jun-14) though the possesion is on Feb-15. In such case, he cannot claim both HRA and Hosuing Loan Interest from Jun-14 to Jan-15. But if the payment is towards pre-EMI during this period (jun-14 to jan-15), then it can be claimed according to 1/5th rule.

        Thanks & Regards,
        Nizam.

        Reply
        • December 26, 2014 at 10:27 PM
          Permalink

          Hi Nizam,

          Answer remain same as given to Sanjay!

          Reply
  • December 4, 2014 at 1:15 PM
    Permalink

    Hello Soubhagya,

    I have a question, which you may have answered but still I am asking:

    I am currently staying in a rental accomodation and I am claiming HRA for the same. I also have a property(in same city) for which I got the possession in the month of Oct 2014. But I am planning to shift to my property in next financial year and I am not giving this property on rent for Oct 2014 to Mat 2015 duration. So my question is:

    Can I claim HRA for the full year as I will be staying on rent along with the home loan interest(around 1.25 lacs) exemption benefit?

    Reply
    • December 5, 2014 at 12:55 AM
      Permalink

      Hi Pulkit,

      Technically you are supposed shift into new house once it is ready to occupy. It will not be a right suggestion if I say “ok” you can opt for what you are planning :-), but you never know when IT officer get into as a random pick up of your file.

      Reply
  • December 5, 2014 at 8:46 AM
    Permalink

    Hi,

    I have taken a home loan for a property fully constructed last year. And, I had paid the entire amount and EMI started as well. Now, the Completion Letter has come last month (but many people took possession without Completion Certificate) and i would be taking possession after paying a years of advance maintenance this month.
    Last Year, i didn’t take any Income Tax benefits. This year, will i be able to take all benefits Principal as well as Interest. Also, can i claim for the entire FY interest or just the interest from day of possession.

    Thanks in Advance.

    Reply
    • December 27, 2014 at 10:14 AM
      Permalink

      Hi Ravi,

      Since the house property is fully constructed and you have received possession certificate this financial year (i.e. 2014-15) then you can claim deductions for both principal and interest repayments on borrowed capital if it is taken as Self-Occupied. In case you don’t wish to stay then you can take entire interest deduction, but you need to pay tax on notional rent income.

      Reply
  • December 22, 2014 at 12:00 PM
    Permalink

    My apartment loan is paid off few years back. The property is rented out and I live in rent in other city and claim HRA. How should I compute tax on rental income?

    Reply
    • December 27, 2014 at 12:09 AM
      Permalink

      Hi Nitin,

      You can take HRA exemption benefits. For calculation of net income from house property you can refer this article.

      Reply
  • December 24, 2014 at 5:13 PM
    Permalink

    Hi Patra,

    Me and my wife bought a flat in joint ownership. My wife sold her jewels and put 50% of property value. I put remaining 50% of money via housing loan. Since its a joint ownership, the loan agreement is also in both of our name though i am paying the full EMI amount. Since it is 50:50 joint ownership, we are splitting the rental income by 50:50. My wife is not claiming any tax benefit out of this housing loan. Now, can i show only 50% rental income and claim 100% of tax benefit on interest amount?.

    Note: My wife will show 50% of rental income in her filing. My wife is not working, but getting income via other (not this particular) house rentals and filing income tax for the last 2 years.

    Thanks & Regards,
    Nizam.

    Reply
    • December 26, 2014 at 10:35 PM
      Permalink

      Hi Nizam,

      In your case you have two options; 1) Show 50% of Income and take 50% of deduction towards repayment or 2) Show 100% of Income and take 100% of deduction towards repayment.

      Reply
  • January 7, 2015 at 12:13 PM
    Permalink

    Hi Soubhagya,
    Please help me with the below queries:
    – I am living in a rented apartment and have a house in the same city. I don’t live in the house I bought as it is far from my workplace. Can I get tax benefit on the home loan and also claim HRA?
    – I have got a tenant for the house from February 2015 onwards. So the income which I have to show from it will be for Feb and March? Or do I need to show notional rent for April 14 to Jan 15 period also?
    – I am paying maintenance charges to the society. Do I subtract that from the rent income to arrive at GAV or do I take that as Municipal tax and then subtract?
    Request your help on these please.

    Reply
    • January 9, 2015 at 11:54 AM
      Permalink

      Hi Sonia,

      You can claim HRA benefits, wrt to rental income you can show full year income and subtract notional income for the period it was vacant as loss due to vacancy. Please note, maintenance charges paid are not allowed to be deducted from income.

      Reply
  • January 11, 2015 at 4:51 PM
    Permalink

    Hi

    I have a property in chennai but its vacant , what is the so called “notional income”. Pls let me know how much amount i should show for tax.

    Thanks

    Reply
    • January 24, 2015 at 12:02 AM
      Permalink

      Hi Vinoth,

      Notional rent is something which is equivalent to similar property in the same locality. But I am sorry, I can’t find out how much amount you should show for tax payment.

      Reply
  • January 14, 2015 at 12:43 AM
    Permalink

    Hi Patra,
    I have a house with ground floor and first floor. First Floor is self-occupied and ground floor is let out. I am paying home loan interest as 341000. How can I show for tax calculations?
    Please help me…

    Reply
  • January 14, 2015 at 11:43 AM
    Permalink


    Hi Patra,
    I have a house with ground floor and first floor. First Floor is self-occupied and ground floor is let out. I am paying home loan interest as 341000. How can I show for tax calculations?
    Please help me…

    Reply
    • January 23, 2015 at 12:11 AM
      Permalink

      Hi Pravin,

      If both houses are similar (area wise) then divide loan repayment in 2 equal parts. For one of the parts (let’s say, self-occupied), figure out how much is the interest and principal repayment portion. Now take principal deduction either Rs. 1.5Lacs or actual payment whichever is less and also towards interest payments, consider actual or Rs. 2Lacs whichever is less.

      For let out portion, only deduct interest (as one of the parts) from rental income (after 30% standard deduction). Now combine both and get net loss/profit from house property.

      Reply
  • January 20, 2015 at 4:23 PM
    Permalink

    Dear Sh. Patra Ji,

    I have only one house as on date, which is in my possession & there are other two flats, which are under construction properties. The said Flat has been given on company lease & I am receiving the lease amount in my bank account after deduction of TDS@10%.
    My query is that “Since one property I can keep as self occupied” so is it necessary to declare the above property as wholly let out or can I declare this as self occupied property to save the income tax on this.

    Reply
    • January 22, 2015 at 11:43 PM
      Permalink

      Hi Rajesh,

      In actual the said flat is let-out already. You can not declare it as self-occupied.

      Reply
  • January 21, 2015 at 9:38 PM
    Permalink

    Hi Soubhagya

    I have brought a house in kerala currently my parents are staying and i am in Bangalore in a rented house can i claim both home loan and hose rent in bangalore.
    Please help me on this

    Reply
  • February 5, 2015 at 12:22 PM
    Permalink

    Hi ,

    I recently bought a house in jan 15 .But cant shift there right from the first day of buying.I have to buy new furniture etc for that home then only i can shift.So why cant i get tax exception on both HRA & interest.

    Reply
    • February 6, 2015 at 9:32 AM
      Permalink

      Hi Mayank,

      You may show house is put for rent for 3 months (Jan-March 2015; I assume you will shift April onwards) & pay tax on notional rent. In this case you can claim both HRA & Loan interest deduction benefits.

      Reply
  • February 26, 2015 at 10:01 PM
    Permalink

    I have two houses; one is self occupied and the other is completed during the last FY on bank loan. But the second house is not let out till now. While computing the income from house property during the current FY, how can I assess the rental income of the vacant house?

    Reply
    • March 5, 2015 at 4:04 PM
      Permalink

      I am expecting a clarification from your side.
      Thanks

      Reply
      • March 5, 2015 at 5:10 PM
        Permalink

        Hi Ajayhosh,

        Not sure how I missed your query! To compute rentals for vacant property, you need to depend upon notional income for the same. Notional rental is nothing, but a rent amount which you can get from similar property in the same locality. Let me know if I answered to what you are looking for.

        Reply
        • March 6, 2015 at 3:50 PM
          Permalink

          You have answered exactly to my query.
          Thank you Soubhagya

          Reply
          • March 6, 2015 at 5:19 PM
            Permalink

            Great! Happy to know this.

  • March 24, 2015 at 8:53 AM
    Permalink

    Hi Soubhagya,

    I have an apartment and is rented out. The association maintenance charge and corporation tax were paid by myself . My doubt is that whether the association charges can be exempted from income tax in addition to the 30% standard deduction allowed ?

    with warm regards
    Harikrishnan

    Reply
    • April 5, 2015 at 11:05 PM
      Permalink

      Hi Harikrishnan,

      No! Such association charges paid are not allowed for deduction claim.

      Reply
  • April 8, 2015 at 1:50 PM
    Permalink

    hi,
    if there is no actual rent in question, than how we will treat in let out house property

    Reply
    • April 23, 2015 at 12:47 AM
      Permalink

      Hi Pasang,

      Can you share some more details?

      Reply
  • April 8, 2015 at 7:37 PM
    Permalink

    Hi Soubhagya,

    Two years back i took home loan, my apartment is still under construction, may be it will complete at year end( december 2015), could you please let me know, i will get tax exception on both HRA & interest.

    Reply
    • April 23, 2015 at 12:54 AM
      Permalink

      Hi Krishna,

      Information are not sufficient to provide a pertinent answer. But until your house is completed you can have HRA exemption benefits, but once you shift to new house you have to lose it. In case your new house is in different city then you have the favorable chance to get both the benefits.

      Reply
  • April 10, 2015 at 4:02 PM
    Permalink

    Hi,

    I have house property at New Mumbai taken by borrowing home loan. I am paying 1300 INR principle amount and 6700 INR interest amount in my total 8000 INR EMI. Currently I am working at hyderbad and staying in rented hostel with 5000 INR per month. I have rented out my property at New mumbai in OCT 2014 ( 6000 rent per month) and till Sep 2014 I was leaving in my property at New mumbai. Also I am paying 700 INR per month as maintenance charge of my property at new mumbai to society. My question is that can I claim tax benefit against maintenance charge that I am paying to society and if yes then under which section ? also since I am leaving in different city on rental basis can claim tax benefit for my home loan principle and interest amount ? please suggest.

    Reply
    • April 23, 2015 at 11:11 PM
      Permalink

      Hi Avdhut,

      Maintenance charge are not allowed as deduction. Since you are staying in other city, then you can claim only interest paid (the house is let out) as deduction of tax. In case the house is vacant then you can show this as self-occupied to claim both principal & interest as well as HRA benefits on rent paid in Hyderabad.

      Reply
  • July 21, 2015 at 12:19 AM
    Permalink

    Hi,
    I have Flat in Bangalore paying interest RS.12000/- & getting rent RS.84000/- and I am staying in Mumbai paying rent Rs. 153750/-
    can I claim lose on housing, HRA & home loan interest

    Reply
  • July 21, 2015 at 12:21 AM
    Permalink

    Hi,
    I have Flat in Bangalore paying interest RS.120000/- & getting rent RS.84000/- and I am staying in Mumbai paying rent Rs. 153750/-
    can I claim lose on housing, HRA & home loan interest

    Reply
    • July 26, 2015 at 12:11 PM
      Permalink

      Hi Bhagwan,

      If you are staying in Mumbai for employment purpose, paying rent there then you will be allowed for HRA benefits plus deduction on interest repayments net of rental income as applied for income under the head of house property.

      Reply
  • August 14, 2015 at 3:43 PM
    Permalink

    Hi Soubhagya,

    I am NRI, own one property since 2004 —treated as self-occupied –never let-out.
    Bought another floor under construction in an open market (in March 28, 2014) – Second house. Got the possession on July 10, 2014 and never let-out. Sold the First house on July 8, 2015.
    Taken home loan for both houses.

    My questions are as follows:
    1) In previous year 2014-2015 —I own two house property, both are self-occupied —Is there any tax liability?

    If there is tax liability and I need to calculate Notional rent, will it be from July 10, 2014 (date of possession) to March 31, 2014? Also can I claim–standard deduction –30% and mortgage interest for full year?

    2) For tax purposes —Can I claim any house as self-occupied and another one as deemed to be let-out? For Each year –can you change this decision?

    3) In 2015-16 –I sold the First house property –I own two houses only for the period (April to July 8, 2015) . I never let-out any property both are self occupied? Is there any Income from House Property in 2015-2016?

    4) In 2015-16 –Is it possible to treat first property self – occupied from April to July 8, 2015 (till date of sale of First property) and
    From July 9, 2015 to March 31, 2015 —treat second property self occupied?

    Reply
    • August 15, 2015 at 9:53 AM
      Permalink

      Hi Raju,

      Find answers in sequence to your queries;
      1. Two houses can’t be self-occupied. If vacant, then it can be shown as deemed to be let-out. Thus, a notional rental value is considered as the gross taxable rent for such property. You will be allowed to claim a standard deduction of 30% for repairs and maintenance charges.
      2. Yes! You can do so.
      3. Only for the period starting from April 1, 2015 upto date of Sale.
      4. Yes

      Reply
    • August 21, 2015 at 4:24 PM
      Permalink

      In Point # 1:
      Are Notional rent, will it be from July 10, 2014 (date of possession) to March 31, 2014?

      Reply
  • August 21, 2015 at 12:55 PM
    Permalink

    I have purchased new property on loan and it is given on rent .
    which ITR from is required to file returns?

    Mahesh

    Reply
    • August 28, 2015 at 9:52 PM
      Permalink

      Hi Mahesh,

      Is this only one house property. No other income (assuming you have salary income)? ITR 1 will work.

      Reply
  • August 24, 2015 at 7:12 PM
    Permalink

    Hi Soubhagya,
    Iam a retired employee continue to reside in a rented Flat paying a rent of Rs.9,000/- + maintenance charge of Rs.1,300/- and my own house is let out for Rs.10,000/- which is a little far of in the city.My income is from Equities Long/Short term gains and dividends. kindly let me know whether I should make set off the rent paid against rent received for tax purpose.

    Reply
    • August 30, 2015 at 1:24 PM
      Permalink

      Hi Rao,

      No! You will not able to offset rental income with rent payments.

      Reply
  • August 25, 2015 at 3:50 PM
    Permalink

    Hi Soubhagya,

    Thanks for reply.

    I am still waiting for response for the following:
    (A) In Point # 1:
    Are Notional rent, will it be from July 10, 2014 (date of possession) to March 31, 2014?
    Also can I claim–standard deduction –30% and mortgage interest for full year?
    What you will enter in tax return for name and PAN # of tenant in case of notional rent?

    Notional rent in that area is Rs. 8,000 to 10,000. I paid interest on home loan of Rs. 180,000 approx. There will be a loss from house property. To claim that loss –Do I need to submit some certificate for notional rent? If yes, from where I can get one?

    Also, Is there any wealth tax liability arise, if I own two residential properties in PY – 2014-15? As I already mentioned in my previous queries I am NRI (Canadian Citizen but carrying OCI Card).

    Thanks for your help

    Raju

    Reply
  • February 26, 2016 at 11:42 AM
    Permalink

    What will be treatment of interest in House Property if the house is vacat for 10 months and let out for 2 months?? How will we avail the interest??

    Reply
    • March 25, 2017 at 12:14 PM
      Permalink

      Hi Manish,

      Rent of only 2 months will be consider for the income since 10 months of none receipt will be treated as loss due to vacancy.

      Reply
  • March 22, 2016 at 3:52 PM
    Permalink

    Suppose if a property situated in Mumbai is deemed let out and municipal taxes have been paid then how to find the standard rent of such property.

    Reply
    • March 25, 2017 at 11:53 AM
      Permalink

      Hi Shenik,

      You need to consider nearby & similar properties rent to arrive what could be standard rent.

      Reply
  • April 1, 2016 at 8:33 PM
    Permalink

    If I claim standard deduction of 30% u/s 24A would it reduce my capital straight away by 30% or the capital would be reduced as per the actual expenditure done

    Reply
    • March 25, 2017 at 11:23 AM
      Permalink

      Hi Anupam,

      I assume, you mean to say “Rental Income Credits”. Standard deductions will be allowed straight 30% of the total rent income irrespective of actual expenses incurred.

      Reply
  • November 21, 2016 at 12:10 PM
    Permalink

    Hi,
    I stayed in my self occupied property in ncr & my parents stayed in Kolkata in a rented house. Shall I able to claim HRA benefit seems I am paying for there rent.
    Please provide a solution to save more taxes….

    Reply
    • March 25, 2017 at 11:20 AM
      Permalink

      Hi Debjyoti,

      Your rented accommodation should be in the same city where you work. Thus rent paying towards parents stays outside the city will not be allowed.

      Reply
  • December 13, 2016 at 11:59 AM
    Permalink

    i personally own one house and co-owns other house with my brother. my brother is staying in the house we co-own, whether it is require that 50% house to be shown as deemed let out property in my return of income ?

    Reply
    • March 25, 2017 at 11:17 AM
      Permalink

      Hi Kunjan,

      Yes! You can possibly do it if the property structure specifically shows they are two house properties else it will raise unwanted questions from ITO point of view

      Reply
  • January 17, 2017 at 6:17 PM
    Permalink

    Hats off to Mr. Patra for replying to so many queries !

    I got a query of my own 🙂 , beginner in terms of tax savings

    I got a loan of 30 lacs,EMI of 25500 for 30 yrs.

    Can someone suggest me what would be :

    Annual Rent Received(Mandatory)for Let-Out Property :
    Annual Municipal Tax Paid :
    30% Rebate & Maintanence Let-Out :
    Interest Paid Current Yr :
    Net Income/Loss :

    Reply
    • February 12, 2017 at 11:28 PM
      Permalink

      Hi Rakesh,

      Sorry for late reply. Can you share what’s the annual rent income to be considered & what would be interest paid (to be paid) on loan for the financial year?

      Btw, if your house property is a self-occupied one then you can claim only upto Rs. 2,00,000 out of interest paid as net loss from house property & other factors such as rent income, rebate, maintenance would be irrelevant here.

      Reply
  • March 8, 2017 at 5:11 PM
    Permalink

    Hi sir,

    I have a query, i have a flat on my husband name, and that flat is on rent 14000 pm. the rental income is directly transferred to my in laws account. EMI is paid by my husband, so i want to know what will be the tax liability for my husband. My inlaws don’t have any income they are retired.

    Reply
    • March 8, 2017 at 6:07 PM
      Permalink

      Hi Priyanka,

      The rental income are going to be part of your husband’s income irrespective of where these are getting credited.

      Reply

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