Computation on income tax - clarification sought - Income Tax

Dear Roshan

1. Even though the rent may be received physically by your spouse, the income will have to offered for taxation based on the ownership ratio of the property, which in fact, helps in reducing your tax liability. That is, the total income from house propoerty will have to split among you and your spouse based on the ownership ratio.

2. As per Section 26 (which deals with co-ownership), each of you will have to compute the house property income individually.

3. Each of you can claim upto Rs.1,50,000 (which will hopefully be raised to Rs.2,00,000 based on proposal in Finance Bill, 2014 for NEXT Assessment Year) towards interest on Home loan. I guess the share of your interest incurred will be mentioned in the certificate issued by the bank every year end for this purpose, based on your ownership ratio.

4. Again, each of you can claim the Principal amount of the loan repaid upto Rs.1,00,000 (which maybe raised to Rs.1,50,000 based on new Budget proposal for NEXT Assessment Year) under Section 80C. Here again, this amount you will get from the certificate issued by the bank.

4A. Interest and Principal amount maybe apportioned to each residential unit based on area/Sq. Ft. You may please clarify the same from some experts.

5. Each of you can declare any one property as self occupied, income from which will be "nil". For taking this decision you both have to compute the income and see declaring which one of the three residential units as Self Occupied, will reduce your liability in total. For this, you have to try differenet options/combitions with your 3 properties, that too, in each of your case.

6. Since in effect each of you own more than one house propoerty, both will have to use ITR-2 and NOT ITR-1 (SAHAJ), assuming none of you has business/professional income for the relevant year.

Regards

Ajay