Wealth tax second residential house

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 December 2012 If possession of house from builder is taken in January 2013 and rented out in February 2013 will this being second house be included in taxable wealth as on 31.03.2013 wealth tax return for Previous year 2012-13 as it is not let out for more than 300 days during 2012-13.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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18 December 2012 Since it is not let out for more than 300 days, wealth tax is payable. This is because the property was not let out by builder also.

Querist : Anonymous

Querist : Anonymous (Querist)

18 December 2012 The house is not ready for possession before January 2013 although 90% paymnet already made.Builder/developer is contructing the house making house ready for possesion by January13. If possession is delayed upto April13, it it make any difference for wealth tax during FY 2012-13.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 Here’s the clarification on your query about the second residential house and wealth tax:
Situation:
Possession of house from builder taken in January 2013.
House rented out from February 2013.
Question: Should this house be included in net wealth as on 31.03.2013 for Wealth Tax return for FY 2012-13 (AY 2013-14)?
Note: The house was not let out for 300 days or more during the financial year 2012-13.
Wealth Tax Treatment:
Definition of "House" under Wealth Tax Act (Section 2(ea)):
Any building or land appurtenant thereto owned on the valuation date (31 March 2013) is taxable.
Let-Out Property Exemption:
If the house is let out for at least 300 days in the previous year, it is exempt from wealth tax.
Possession Date and Ownership:
If possession (and effective ownership) was taken in January 2013, the house is considered owned on 31 March 2013.
Builder’s possession or "ready to occupy" status before January 2013 does not affect your ownership unless possession was actually transferred.
Effect of Rental Period:
Since the house was rented out only from February 2013, the period of letting during FY 2012-13 is less than 300 days.
Conclusion:
The second house will be included in taxable wealth as on 31.03.2013, as it was not let out for the minimum required 300 days during the FY 2012-13.
What if Possession Is Delayed to April 2013?
If possession is delayed to after 31 March 2013, then you do not own the house on valuation date.
So, the property will NOT be included in net wealth for FY 2012-13 (assessment year 2013-14).
It will come under your wealth for the next valuation date i.e., 31 March 2014 (AY 2014-15).
Summary Table:
Scenario Wealth Tax Impact for FY 2012-13 (valuation date 31.03.2013)
Possession taken in January 2013 House included in net wealth (since owned on 31.03.2013) and not let out >300 days → Taxable
Possession delayed till April 2013 House not owned on 31.03.2013, so not included in net wealth for FY 2012-13

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