2 house - different owners

Tax queries 538 views 2 replies

Kunal

Others

32 Points Posted on 01 January 2014

1. I have a home in Ahmedabad for which I'm paying the loan EMI. The house is occupied by my parents. I don't receive any rental income. I have been availaing the tax benefits on the interest/ principal part of this loan so far. I am sole owner of this house. EMI for this house is around 18k.

2. I live in Bangalore and I had purchased second house. In which, Me & My wife are owners & co-borrowers(Ownership % is not defined). EMI for this house is 36k.

I have the following questions:

1) How can i get maximum benefit under income tax? which house should be declared as Self-Occupied?

2) My limited understanding is that I can claim benefits on the loan's interest component without the 1.5 lacs restriction. (i.e. combine the interests from both the houses and claim tax benefits for the full amount). Is this right?

3) What kind of tax benefits will I get? What kind of benefits will my wife get?

Thanking you in advance for your expert answers,

Replies (2)

@VaibhavJ

Believe!! Live your dreams!

33521 Points Posted on 01 January 2014

You have to decllare one house as occupied & one will be deemed to be let out.

Thanks

Bhavin J. M. Dedhia

Chartered Accountant

47 Points Posted on 01 January 2014

If you own two house property - then one property is deemed to be let out - rented. You have an option to treat either of property to be deemed as let out. (Normally where the notional rent taxable would be less is deemed as let out so as to avoid unnecessary taxation).

Therefore one property will be self occupied and another will be let out (deemed).

Now, the interest cost allowability as deduction is:

In case of self occupied - deduction of interest is restricted to Rs.1.5 lakhs

In case of deemed let out - there is no such limit and that the entire interest paid can be claimed as deduction under the head of Income from House Property.