25 December 2012
Respected Sir, I have bought a new flat and now I want to rent it from Jan 2013. Please guide for my following queries: [ 1 ] Upto which limit rental income is tax free? [ 2 ] Will the proprty be considered as let out property for entire year and only interest will be considerable for Income tax deduction?(Property remains vacant if it is not let out becaus I am living with my father) What is the minimum period for considering a preoperty either it is a let out property or not? [ 3 ] Is brokerage paid to rent the property eligible for deduction from income from Housing property?
25 December 2012
1. Dear Friend,The rental income is not exempt under Income Tax Act, 1961, but TDS provisions is not applicable upto Rs. 180000/-. If your income from all sources is in excess of Rs. 200000/- then rental income is taxable.
2. The property is considered as let out property from Jan 2013 for a period of three months for AY 2013-14.
3.The interest upto Rs. 150000/- and instalment upto Rs. 100000/- will be deductible as per provisions of Income Tax Act,during the year.
4. Brokerage paid is not deductible under section 24 of the Income Tax Act, 1961.Thanks
25 December 2012
Respected Sir, SOmebody told me that only interest is deductible in Income tax and no principal, if property is let out. Please clarify.
25 December 2012
Mitesh, The Interest is directly deductible from the House Property Income. The principal can be deducted from your total income subject to a maximum of Rs. 1,00,000/- in a year. This is under Section 80C, which relates to deductions from GRoss Total Income. The total deduction under Section 80C whether House Property principal repayment/investment in PPF/ etc is Rs. 1,00,000/-. I hope this clarifies your doubts
28 December 2012
Respected Sir, My query is that if I rent house only for 3 months in a year, then will it be counted as rented property and interest of rs. more than 1.5 lac can be deducted? Or it will be not considered as rented property and only interest upto rs. 1.5 lac will be deducted?
28 December 2012
in my view, whole of interest is allowable as deduction for a let out property, even if property is let out for a short period.
This is because, the limit of Rs. 30,000/- or Rs. 1,50,000/- applies to only properties referred to u/s 23(2) Section 23(2) refers to property being SOP and whose annual value is taken to be NIL.
In yourcase the annual value wont be taken as nil. hence total interest even if it exceeds Rs. 1.5 lakhs is allowable and should be allowed to you as a deduction.
CAclubindia
