Rental income of two houses

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This query is : Resolved

sumit khare (Querist)

18 March 2014 I have two flats ,one is in a city other than my workplace at present rented and other is in the city where i am posted and living in that flat with company self lease scheme (My own house rented to me by company and i am getting monthly lease amount through company). My query is as follows

1. In two houses which one i can choose as self occupied as the house which is self occupied is also self leased and shall come in rented category .Is there any option for choosing any one as self occupied .

2. If there is any option for choosing any one as self occupied then can i choose the house which is self leased as self occupied as the same has more rental value and shall be beneficial in Income tax calculation.

3.In case of both flats i have taken home loan and shall consider the interest part of home loan for house loss calculation.

4.What is the case if the house in the other city is vacant

Thanks in advance for sharing your knowledge

Rajagopalakrishnan R

Rajagopalakrishnan R (Expert)

18 March 2014 Technically speaking,
1. Both the houses are not self occupied. The one where u are staying is "Occupied" by your employer and you are merely enjoying a perk from the employer by staying there. The one in your home town is obviously not self occupied as you have yourselves rented it out.
Therefore you have to show both the houses as let out only.
The reason why you cannot show the house you are now staying in as self occupied is that you are getting a rent for that from your employer company. A self occupied house has its Annual letting value as nil. If your were to treat this house as self occupied, then a contradictory situation would arise whereby you will receive a rent which would escape assessment. This is obviously not the intention of the section.
If the house in the other city is vacant you can treat the same as self occupied, which will save you from offering the ALV as income.
Your can still claim the interest in both loans as both are let out property. In case of vacant flat, you can decide - if you have interest above Rs. 1.5 lakhs, then u can see if it would be beneficial to offer Annual Letting value and reducing the entire interest, rather than claim only 1.5 lakhs as interest on Self occupied property

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