House property income taxation

Follow 5 Replies

Giridhar S Karandikar (Team Lead) 14 December 2015

Hello All,

I owned a house property whihc wsa self-occupied by me in the current year from Apr15 till Sep15.

In Sep 15 I shifted to a new property whihc is also self-occupied by me. The agreement was being made in 2014-15, sale deed is yet to be done.

Now the earlier property is remaining vaccat till date. I have also not got any tenant till date. Now if I don't get a tenant till march16 then how would the taxation be determined, would it be treated as deemed to be let out for whole year or part of the year and taxed accordingly.

But say if I get any tenant in these 4 months till March 16, then would it be treated as let-out property for whole year

ajeet singh (Business) 14 December 2015

Hello All,

I booked a flat in Gurgaon on 15 February, 2011 for Rs. 1.70 Crore for which I have already paid an amount of Rs. 1.63 Crore. I have not yet taken the possession of the said flat, now I am finalizing the sale proceed of this flat for Rs. 1.81. I just want to know that since I hav'nt take the possession of the said flat so can I treat the profit as a business income & adjust it with my regular business income / loss ( I owned a proprietorship firm & in leather garment business) or it will be treated as a long term capital gain. Pls advice.

Ankit Taprania (CA FINAL ) 14 December 2015

hi Giridhar , assume you did'nt found any tenant now from april to sept your self occupied house will be house 1 and after sept you have a option to treat either one of the house as self occupied (it does,nt matter that no one is living in house 1) and the other house will be treated as deemed let out and accordingly chargable to tax. Treat that house as self occupied from where highest income could have been generated. ON THE OTHER HAND if you found a tenant say on 1 jan 2016 then your case will have 3 parts from april to sept - house 1 is self occupied , from oct to dec - treat either one of the house as self occupied , from jan to march - house 2 is self occupied house and house 1 is let out house and accordingly chargeable to tax.

1 Like

Ankit Taprania (CA FINAL ) 14 December 2015

Hello Ajeet ji, NO you can't treat it as business income as you have earned capital gain . What you are thinking is that since you have not taken the posession of the flat you have not purchase and sold any capital asset . See that's where you are wrong . After paying 1.63 crores what you have earned is a RIGHT TO TAKE POSSESSION of flat . Here that RIGHT is a capital assest and you have sold that capital asset for 1.81 crores . Therfore you have earned a capital gain and not business income.

Naveen sharma (student) 14 December 2015

Hi girdhar.....one house will be treated as Deemed to be let out....and other one will be self occupied....While calculating actual rent u will have to deduct num of months for which d house let out is vacant.... And after that ol the other calculations will take part....Case 1 treat house 1 as Deemed to be let out and house 2 as self occupied.....in case 2 treat house 1 as self occupied and house 2 as Deemed to be let out.....least tax proposal will be consider so that overall tax will be least...

Naveen sharma (student) 14 December 2015

Hello Ajeet...Capital Asset is defined in section 2(14) ....house property is considered as a capital asset.....as u have transferred the property after 3 yrs therefore it will be long term capital gain U/S 112 taxable @ 20%.....in d given case right of ownership is Capital asset.....hence it will be taxable as capital gain...u r misjudging it with the speculative business income U/S 43(5) PGBP....but in practical term speculative business time period is short term I.e from 1-12 months...but u r not in a speculative business.... U can invest the Capital gain amount in purchase of capital asset and claim exemption Under different section of capital gain