Income Tax Benefit for 2 houses

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Querist : Anonymous

Querist : Anonymous (Querist)

09 February 2011 Hi,

I am working in Bangalore and have a flat in Mumbai (where my parents live) and I live in my own flat in Bangalore (my wife is a co-applicant/co-owner). Till last financial year I was showing Bangalore flat as Self Occupied and showing notional income for Mumbai flat. My question is :

1) Can I show Mumbai flat as Self Occupied and show notional income for Bangalore flat, even though I am living and working in Bangalore ?

2) The interest for Mumbai flat is very less (less than 20 K) and for Bangalore flat it is around 2,00,000/- (my wife will not claim her part in next financial year). If point (1) can be done, does this holds good even when I pay off the Mumbai flat loan ?

3) For my finance department please let me know which Act of Income Tax you are referring to. I understand Act 23 of the income tax but it doesn't specify anything about the city.

Thanks in advance.

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09 February 2011 I am working in Bangalore and have a flat in Mumbai (where my parents live) and I live in my own flat in Bangalore (my wife is a co-applicant/co-owner). Till last financial year I was showing Bangalore flat as Self Occupied and showing notional income for Mumbai flat. My question is :

1) Can I show Mumbai flat as Self Occupied and show notional income for Bangalore flat, even though I am living and working in Bangalore ?

An assessee having 2 residential houses, has got option to take one house as self occupied but it is subject to certain restrictions.
You could have opt Mumbai Flat as SOP, in case you are residing in Bangalore in a flat which is not belonging you.

So in my opinion you can not treat Mumbai Flat as SOP.

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09 February 2011 2) The interest for Mumbai flat is very less (less than 20 K) and for Bangalore flat it is around 2,00,000/- (my wife will not claim her part in next financial year). If point (1) can be done, does this holds good even when I pay off the Mumbai flat loan ?

2. The query is not very clear still I am trying to remain as near to the intention as I could understand.
As point 1 can not be done, the answer of this query is not needed at this stage.
But, in case of Interest, You and your wife both are entitled to claim 1.50 lac (max.1.50x2= 3.00 lacs).

CA PARAS BAFNA

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09 February 2011 ) For my finance department please let me know which Act of Income Tax you are referring to. I understand Act 23 of the income tax but it doesn't specify anything about the city.

For the matter you have to refer Section 23(2), Section 24 and Section 26 of the Income TAx Act, 1961 (as amended by Finance Act 2010).

Querist : Anonymous

Querist : Anonymous (Querist)

10 February 2011 Dear Sir,

Thanks a lot for the reply. I think your answer clarifies all the combinations I can think of regarding multiple houses. Wanted to ask one more question (doesn't pertain to me) out of curiosity.

Assuming I have a flat in Mumbai and a flat in Bangalore, both self owned and I stay in a rented premises in Bangalore. In this case, can I mark Mumbai flat as self occupied. This is based on the assumption that my own house in Bangalore is too far off from my work place and I cannot afford to live there.

Thanks again for the help and resolving my doubts.

Regards,
Saurabh

CA PARAS BAFNA

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10 February 2011 A nice and intelligent question.
Please read Modified Reply

An assessee having 2 residential houses, has got option to take one house as self occupied but it is subject to certain restrictions.
You could have opt Mumbai Flat as SOP, in case you are residing in Bangalore in a flat which is not belonging you.

As you are not occupying Bangalore flat also, you may claim any of your flats as SOP. Even though, rental or deemed rental income of Bangalore Flat will e taxable in your hand but in such case you may get HRA benefit.

Querist : Anonymous

Querist : Anonymous (Querist)

11 February 2011 Dear Sir,

Thanks a lot for the reply and appreciate the patience shown. Surely, income tax laws do not have definative guidelines (and base itself on what is projected) because as per your last reply anyone can claim they are living in a house not owned by them (and not claim HRA also) and then do things as per their wish. I will take things forward as per the correct facts and plan accordinly.

Thanks again.

Regards,
Saurabh

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