When to claim deduction of reimbursem tax paid by tenant and
Querist : Anonymous
under such, when can landlord will claim deduction of the reimbursement of the property tax paid by the tenant in f.y.2012-13 ?
The language of the act suggest actual payment of taxes. So, claim in FY 2012-13 and keep the reimbursements out of books.
Municipal tax has been actually paid during the year by tenant on behalf of the owner.
Querist : Anonymous
Here’s how it works for municipal tax paid by the tenant on behalf of the landlord:
Deduction for municipal tax under the Income Tax Act is allowed to the owner in the year in which the tax is actually paid — that means the year the tenant paid it to the municipality (FY 2012-13 in your case).
The reimbursement paid by landlord to tenant is treated as just repayment of an expense already paid by the tenant on behalf of the landlord. So this reimbursement itself is not an additional deduction; it’s just passing back the money.
Therefore, the landlord should claim the municipal tax deduction in FY 2012-13, when the tax was actually paid by tenant (on landlord’s behalf), and not in the year reimbursement is made (FY 2013-14).
The reimbursement paid in FY 2013-14 is not an expense under house property, as it relates to the municipal tax already paid and claimed in the earlier year.
Summary:
Claim municipal tax deduction in FY 2012-13 (year of payment to municipality), and treat reimbursement to tenant as repayment — no extra deduction in FY 2013-14.
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