House property income (self occupied and notional)

Tax queries 997 views 5 replies

meabhijit

Project Manager

172 Points Joined December 2011

Hi All,

Need expert advice.

I have a house property obtained with home loan. The annual interest for the loan is 228704Rs. I occupy the house for 8months in an year while 4months the property is vacant. Please do suggest if the following calc for "Income from home/property" is correct.

For 8 months:(Self Occupied)

1. Annual value is NIL, Standard deduction NIL and Intrest deduction upto 1,50,000Rs. So the calc would yield taxable income from property as -1,50,000Rs which can be deducted from other heads of income.

For 4 months: (Notional)

1. Annual value 35000, Standard deducton 10500 and interest deduction of 76234Rs. (228704Rs/12 = 19058Rs/month. So for 4 months = 19058Rs*4 = 76234Rs). This calc would yield taxable income from property as -51734Rs which can be deducted from other heads of income.

So total deductible income from property (loss) is 1,50,000 + 51734 = 210734Rs.

Replies (5)

Guest

Dear Abhijit,

The Annual value of SOP is always NIL. The above bifurcation is not allowed even if the SOP is partly vacant. If u have 2nd house then one house can be deemed to be let out.

Thnx

Giridhar S Karandikar

Team Lead

7558 Points Joined November 2011

If the property is vacant for the reason other than that specified u/s 23(2)(b), then the property should have ben deemed to be let out during the previous year, provided that the property is the only property owned by the assesse & he does not own more than 1 property.

So in your case if you owning only the property as mentioned & no other property is being owned by you then it will be considered as an self occupied property & you can take interest deduction upto 1.5l only.

I have attached the extracts of section 23(2)(b)

23 2) Where the property consists of a house or part of a house which—

(a) is in the occupation of the owner for the purposes of his own residence; or

(b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him,

the annual value of such house or part of the house shall be taken to be nil.

(3) The provisions of sub-section (2) shall not apply if—

(a) the house or part of the house is actually let during the whole or any part of the previous year; or

(b) any other benefit therefrom is derived by the owner.

CA. Gopi Vijayaragavan

CA in Service

70 Points Joined July 2009

As per Section 23 (3) The provisions of section 23 (2) shall not apply if—

(a) the house or part of the house is actually let during the whole or any part of the previous year; or

(b) any other benefit therefrom is derived by the owner.

It does not mean that the notional income is to be calculated for the self occupied property.

For the purposes of section 22, the annual value of any property shall be deemed to be the sum for which the property might reasonably be expected to let from year to year.

Therefore, if the property self occupied for the part of the year and let out for the part of the year, income from property shall be calculated for the whole year as deemed let out.

further, you can claim entire interest.