Taxability of House Property

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Rahul Pujara (Querist)
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03 September 2009 I have a house property in Baroda (taken on loan) which was self-occupied but now given on rent. We are living in Bombay as I am transferred.

I have also taken loan for purchase of flat in Delhi which we have rented out. My wife is sole-owner of flat.

Now I have following questions:

1. For my Delhi Flat for which I am repaying loan from my taxable income (as my wife is house wife), whether I am eligible for interest paid as deduction from rental income? My wife is sole owner of flat; however loan is in my name.

2. My Baroda house is in joint name with my mother. Can rental value be divided in equal share among us for showing income under Income Tax?

3. Can I avail the full interest deduction on my Baroda house as I am repaying loan from my taxable income?

Thanks a lot for your valuable time..

Regards,
Rahul

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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03 September 2009 1. YES .

2. YES

3. THE HOUSE PROPERTY INCOME COMPUTED AFTER ALLOWING DEDUCTION FOR INTEREST ALSO WILL BE EQUALLY TAXED

Rahul Pujara

Rahul Pujara (Querist)
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03 September 2009 Dear Sampat,

Thanks for info..

However with respect to claiming deduction for my Delhi Flat is it not the requirement that I have to be co-owner?
Actually I was reading various articles/queries after posting my query. What I came to know is that it is necessary to be owner/co-owner of property for claiming deduction for interest and principal. Also I would not be considered as "deemed owner" as I am not falling in the definition.
Please give your advise on this.

Thanks a lot,

Rahul

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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06 September 2009 SECTION 80C(2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assesseeâ€”
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(xviii) for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head â€œIncome from house propertyâ€ (or which would, if it had not been used for the assesseeâ€™s own residence, have been chargeable to tax under that head), where such payments are made towards or by way ofâ€”

(a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

(b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

(c) repayment of the amount borrowed by the assessee fromâ€”

(1) the Central Government or any State Government, or

(2) any bank, including a co-operative bank, or

(3) the Life Insurance Corporation, or

(4) the National Housing Bank, or

(5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) of section 36, or

(6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

(7) the assesseeâ€™s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

(8) the assesseeâ€™s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society; or

AS SUCH IF YOU HAVE PAID ANY SUM FOR repayment of the amount borrowed by YOU FROM ANY BANK FOR for the purposes of purchase or construction of a residential house YOU ARE ELIGIBLE. MOREOVER AS YOU HAVE SAID YOUR WIFE IS HOUSEWIFE ......THE SUBSTANCE IS THIS THAT YOU HAVE PURCHASED THE HOUSE ...........SUBSTANCE WILL PREVAIL UPON FORM......BUT YOU HAVE TO FIGHT YOUR CASE

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