Both myself and my wife are employed. We are staying in a Rented House and I am currently claiming the HRA for the same. Recently we bought an apartment in the same city which is going to be completed in June 2015 on a Housing Loan. The Apartment as well as the Housing Loan is in the name of both myself and my wife (as a Co Applicant). Once we get possession we plan to rent out the apartment and continue to stay in the rented house where we are currently.
Given the above Scenario from a tax planning perspective - i wanted to summarize my understanding and validate if the below is correct:
1. Husband can continue to claim HRA since we plan to rent out the apartment.
2. Husband can claim Benefit on Housing Loan Interest. Wife can also claim Housing Loan Interest Tax exemption due to being a co-applicant.
3. House Rent on the Apartment let out for rent would need to be shown as Additional Income. Can just the wife show this Additional Income in her tax returns given that her income is less and so it would be lesser tax bracket. Would the husband also need to show some portion of rent as income - is this mandatory or is it OK as long as one person shows the Addl. Income in the returns.
Kindly validate and let me know if there are any gaps/issues with the above points called out.
CAclubindia
