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Income from house property

Arun (Freelance Software Professional) (183 Points)

02 July 2009

I have purchased a property in my wife’s name and we have decided to give it on rent. While it is still unoccupied is it ok if do as follows (while filing return this year):

Annual letable value = A

The amount of rent which cannot be realized = A

Tax paid to local authorities = Zero

Balance would come out to be zero but if it’s ok then it would let us claim full benefit of interest component of our home loan instead 1.5Lac limit.

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6 Replies

Sunali (Learner) (1317 Points)
Replied 02 July 2009

Hi Arun,

In the given case, since the property has not been let out, there won't be any rental income. However, the interest paid on home loan can be claimed as deduction up to Rs. 150000/- under the head 'Income from House Property', but only if the property is self occupied.

(Guest)

Hi Arun,

Since the house remains unoccupied, you can claim the interest on loan by treating it as self occupied in that case your annual valiue will become Nil and no municiple tax will be allowed and interest will be allowed u/s 24.

If you treat it as let out property then annual value to be considered will be actual rent received or municiple value which ever is higher subject to fair rent then claim municiple rent if any then standard deduction @ 30% and then interest upto Rs.150,000 u./s 24.

I would suggest treat it as self occupied (keep thing simple!).

RITESH KOTHARI (B.COM, FCA, DISA(ICAI)) (778 Points)
Replied 02 July 2009

it will not be 100% safe as how can anyone not question a case where 100% of rent is not realised.

its better to claim normal loss upto 150000/-

sushil (Accounts) (62 Points)
Replied 23 July 2009

Owned house is away from the place of work. We are claiming HRA exemption. and also paying interest on housing loan. now propety was not let out in the previous year. in this case how to calculate income from HP.

To make it simple can we claim HRA exemption and simultaneously los under HP as Rs.1,50,000/-

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 23 July 2009

Yes sushil if the owned house is away from work place you can claim both HRA & loss from HP upto Rs. 150,000/- on account of interest paid on housing loan simultaneously.

sushil (Accounts) (62 Points)
Replied 23 July 2009

Thanks Sir,
One more query..

Person has got 2 properties. one which was 1 bhk was rented for the entire year. another which is 2 bhk was rented for only 4 month. during this 4 month owner was residing in a rented house for employement purpose. but after 4 month he shifted to his own house hence for rest of 8 month it was self occupied. Assesse is paying interest on this house more than 1.5 lacs.

Now please let me know if below treatment is correct or not.

for 4 month asessee will claim HRA exemption. 2 bhk house in which he was residing for rest of the year will be treated as let out property for the entire year and full exemption will be taken u/s 24 of standard deduction and entire interest on housing loan i.e. if he is paying even 3 lacs as interest it will be available for deduction. Income from this house will be treated for the entire year and not for lnly 4 months.

Please let me know if above treatment is correct or not.