Rental income - joint ownership & nav calculation

Dear Vinay

Your Query complies of lot many questions involving various sections of the Income Tax Act. I am answering your query to solve as much doubt as possible for you. 

First of All, under Income Tax Act, it is not solely important to see in whose name the property is purchased, We have to see, whose money was invested. Ifit was only your money, than the property completely belongs to you and hence, income in respect of your wife's share will be clubbed in yours income. But if you and your wife independently paid for your respective shares, then you become co-owners and thus, property income will be distributed in your holding ratio.

Further, Since your property was partly self-occupied and partly let-out, the computtation will be as follows:

Step 1. Compute Fair Rental Value for all 12 months i.e Reasonable Expected Rent for the whole year.

Step 2. Calculate Actual Rent recd./receivable by you.

Step 3. Higher of the above will be GAV.

In case where property is let out for part of the year, the assessee has to calculate GAV in respect of whole year, if thats higher than Actual Rent.

In respect of interest on housing loan, total interest will be allowable as the property is letout for part of the year, limit of Rs.150,000 will not be applicable.

Rental income cant be completely shown to be that of your wife.

Thanks and regards

Ankit Khemka

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