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Two houses can have self-occupied status

(Guest)

Two houses can have self-occupied status

I had purchased a house in 2009 availing a housing loan. The house is self-occupied and I have been claiming the benefits under the Income Tax Act in respect of the interest and principal repayment on the loan. I am planning to buy a house nearby. Can I show the new house as an extension of the self-occupied house.

If no, how will I be able to claim the benefits in respect of the interest and principal repayment on the new loan?

txns in advance.

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11 Replies

(Guest)

Dear Vasanth,

You can show both properties as self-occupied if it is true. You could demonstrate that though the houses are separate, the adjacent houses are being used as one house property and so should be treated as one.

Whether the house property is self-occupied or let out, you can claim the benefit deduction u/s 24 in respect Of interest and u/s 80-C in respect of the principal repayment.

If a property is self-occupied, deduction in respect of the interest will be restricted to Rs 1.50 lakh. If the is let out, there is no ceiling on the deduction. If the property is leased out, the rental income will also have to be offered to tax.

Regards

K.Ilayaraja.

Amir (Learner) (4016 Points)
Replied 08 May 2010

Dear Vasanth,

Agree with friend above but still I feel there are less chances that two houses can be allowed as Self Occupied unless 1house is constructed on adjacent plots.

Only one house can be claimed as self occupied & the other will be treated as Deeemed Let out, at the option of the assessee...

Self occupied house - Limit is 1.50 Lacs for deduction of interest.

Deemed let out - No limit & entire interest will be allowed

Jeet Biswas (ACMA (in Service)) (5073 Points)
Replied 08 May 2010

Amir is right. If it was in an adjacent plot or was an extension in form of an additional floor...things wud hav been easier for you.

Ayushraj (Professional) (125 Points)
Replied 08 May 2010

The two adjacent property can be treated as one - Self occupied house property.

There is a case Law on this subject, i don't remember the name immediately.

But the facts of the case are such that the assessee had two flats one in Wing-A and another in Wing - B of the same complex. Which was treated as one HP.

In another case it was held that having two flats on same floor or within the same wing will amount to one HP.

So if your case falls under the above category, you can claim it as one HP.

1 Like

CA Mallika Chaudhary (CWA Final and CA) (418 Points)
Replied 08 May 2010

Agree with Ayushraj...

there was also a case ( will check wd the Instt.'s monthly magazines and let u know exactly) which said that two neighbouring houses could be considered as one ...as they were a single individual's property...

1 Like

Nitin Grover (CS) (1228 Points)
Replied 08 May 2010

Dear Friend

You can purchase more houses also but in this case means in first house which is self occupies the max limit of Int deduction u/s 24 b is 1.50 lac and principal amount in 80 C

if u purchase new house and used for self occupied then also it will deemed as rental house and income will deemed under Income from House Property as per Rent of that Area fixed by Govt. or receiving whichever is Higher and int in this case u/s 24 b is unlimited and Principal is in 80 C.

Regards

vikash rathi (Chartered Accountant) (787 Points)
Replied 08 May 2010

Originally posted by : Amir
	Dear Vasanth, Agree with friend above but still I feel there are less chances that two houses can be allowed as Self Occupied unless 1house is constructed on adjacent plots. Only one house can be claimed as self occupied & the other will be treated as Deeemed Let out, at the option of the assessee... Self occupied house - Limit is 1.50 Lacs for deduction of interest. Deemed let out - No limit & entire interest will be allowed

totally agree with amir...

Prachi Jindal (CA-Article-Final-Student) (129 Points)
Replied 08 May 2010

Originally posted by : Mallika Chaudhary
	Agree with Ayushraj... there was also a case ( will check wd the Instt.'s monthly magazines and let u know exactly) which said that two neighbouring houses could be considered as one ...as they were a single individual's property...