Deemed let out property

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This query is : Resolved

Bipin (Querist)

08 December 2011 Self and spouse have purchased 2 adjoining house in FY 11-12 wherein for both house they are co owners and joint applicants for the 2 housing loan.

The first housing being designated SOP. For the second house the spouse has contributed only 10% of equity but paying 100% of the EMI.

Query: Can the spouse claim entire interest forming part of EMI for the 2nd house (which is ready and lying vacant) for determining loss on house property?

Guest

Guest (Expert)

10 December 2011 10th December, 2011

Dear Bipin,

I presume 1 house has been acquired with the self as the first name and the spouse as the second name; and the other house has been purchased with the wife as the first name and self as the second name.

Since the first house is designated SOP, the second house will be deemed let out property and will be liable to Income Tax based on the fair rental value of the house. Entire Interest paid for loan taken to purchase the 2nd house will be deducted from the fair rental value.

FCA Prashant Chavan

Bipin

Bipin (Querist)

12 December 2011 Hello Prashant, Thanks for the input.

Both the properties are in the same name sequence( self and 2nd name of the spouse).
The purchase agreements do not provide any data on the share of ownership of the 2 properties.

Would your answer change with the above facts? Would the AO raise / reject claim of interest paid by the spouse on DLOP under the pretext that only 10% of equity contribution.

Guest

Guest (Expert)

12 December 2011 12th December, 2011

Dear Bipin,

My answer remains unchanged.

Loss from House Property can be carried forward to be set of against Income from House Property for eight assessment years.

FCA Prashant Chavan

Bipin

Bipin (Querist)

12 December 2011 Thanks for the update Prashant,

A supplementary point can such loss on house propery be adjusted against salary income by the Employer such that it results in lower monthly TDS for the assessee?

Guest

Guest (Expert)

12 December 2011 12th December, 2011

No. Loss from House Property cannot be adjusted / set-off against Income from any other Head / Source.

FCA Prashant Chavan

Bipin

Bipin (Querist)

12 December 2011 Thanks Prashanth,

Oddly I was reading some net based articles which suggested quotted Sec 71 and Sec 71B that discussed set off between Loss of House property against Salary Income and Income from other sources.

regards

Bipin