Interest on let out property co-owned

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This query is : Resolved

Sunil (Querist)

09 January 2011 Hi,

Request advice:

Say, I (A) have a property that's co-owned with B & C, and our ownership share isn't mentioned on the regsistered Agreement of Sale. Now, this property is let out say for Rs. 9,000/- p.m. for 10 months, and I (i.e. A) am repaying entirely a loan thats taken to finance the property. Say the Interest for the FY comes to Rs. 75000/-. Is my share of the loss from the property Rs. 54,000/- [(90,000/3*0.70)-75,000], while B and C are taxed on property income of Rs. 21,000 each? Am I right in assuming this?

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)

10 January 2011 Since respective shares of the co owner are not definite and ascertainable, income will be taxed in the hand of person receiving the rent.

However, A will get full deduction of interest paid by him.

Vivek Raju P

Vivek Raju P (Expert)

10 January 2011 no you cannot claim the interest expense in full and offer only a proportionate share of income.

Your interest expense should also be on the lines of the share of income.

K V Subba Rao

K V Subba Rao (Expert)

10 January 2011 In the absence of specific allocation of share in the Title Deed, the property is supposed to be owned by all three in equal proportion. So I opine that only 1/3rd of Rent and 1/3rd of Interest should be considered for tax purpose in the assessment of Mr A

Sunil

Sunil (Querist)

10 January 2011 Thanks, friends. Believe though that there is no clause that stpulates the splitting of income tax benefits. So, in perspective, am I not eligible to claim the entire interest amount paid by me as an IT benefit?