abt house property

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RAKESH

Almost CA

1868 Points Posted on 30 December 2008

An Assessee constructed a building with one floor some 8 months back . the ground floor is let out on rent and the income so collected from that portion (ground floor) is 36000/- per annum . At the end of the year the assessee wants to know the income from these house property

Following info is available :

Rent received from ground floor : 36000/-

Corporation Tax : 2313/-

Water & sewage Tax : 14714/-

the assessee took a loan for the construction of the house 3 yrs ago . The assessee paid to the bank in the previous year:

Interest during the year : 78048/-

Principal amount : 28849/-

wat will be the income from the house property after deducting all taxes and the interest paid during the year???????????????.....

Replies (8)

CA Chaitanya

PRACTISING CA

3022 Points Posted on 30 December 2008

You have to calculate income from house property in the following manner.

CA Chaitanya

PRACTISING CA

3022 Points Posted on 30 December 2008

The house is partly self occupied and partly let out.

CA Chaitanya

PRACTISING CA

3022 Points Posted on 30 December 2008

	Let out	Self occupied
Gross Annual Value	36000	0
Less: Municipal Taxes (only to the extent of let out portion)	(8514)	0

Net Annual Value	27486	0
Less: Interest on borrowed capital	(39024)	(39024)

Income from house property	(11538)	(39024)

	(50562)

CA Chaitanya

PRACTISING CA

3022 Points Posted on 30 December 2008

The principal amount can be claimed as deduction u/s 80 C.

HARSHIT KABRA

STUDENT

79 Points Posted on 31 December 2008

                                                      LET OUT                      SELF-OCCP.
Gross Annual Value                    36000                                       0
Less: Muncipal Taxes                   1157                                       0
                                                      ------------                             -----------
NET ANNUAL VALUE                  34843                                     0
Less : Std. Ded. @ 30%             10453                                        0
             Int.on Borrowed               39024                               39024
             capital
                                                        -------------                          ------------
                                                        (14634)                             (39024)

INCOME FROM PROPERTY = -14634 + -39024
= -53658/-
PRINCIPAL SUM PAID CAN CE CLAIMED AS DED. U/S 80C AS ITS USED FOR RESIDENTIAL PURPOSE.

Municipal Taxes to the extent of Let out will be allowed as nothing is mentioned regarding the area occupied it is considered as 50 - 50.

NOTE : Any mistake in my calculations and consideration are most welcomed.

Pavan Jain S

Chartered Accountant

1445 Points Posted on 31 December 2008

Since the HP is constructed in the current year, will not the concept of interest pertaining to preconstruction period apply and only 1/5th will be allowed u/s 24(b)?

RAKESH

Almost CA

1868 Points Posted on 31 December 2008

thanks sir..........

HARSHIT KABRA

STUDENT

79 Points Posted on 02 January 2009

          The deduction of 1/5 of interest paid on money borrowed for construction is allowed..
           Total interest for the equal deduction is calculated from the date of loan borrowed til the date of completion of construction or the end of relevant assessment year whichever is earlier.
           The above case will qualify for the equal ded.