Rental income losses

If A has a property leased to a company which pays rent after deducting TDS. 

 

Scenario:

 

In the Financial year 2023-24

The property was sealed by MCD for misuse in October 2023.

But the lease is intact and ongoing. 

Tenant paid rent for 7 months starting April 2023 to October 2023. 

But did not pay rent for Nov 2023 to March 2024.

And the owner had to pay conversion charges in form of penalty to the tune of 1,00,000/- to the MCD and the property is under the process of deasealing. 

 

Now for the AY 2024-2025 can the owner claim these losses. 

1. The rental loss due to nonpayment by tenant in this scenario of sealing. 

2. The amount paid to MCD. 

 

If yes then, how and what all documents needed. 

 

Thanks in advance 

Replies (3)
Quick Summary
This discussion explores whether an owner can claim losses from unpaid rent and MCD penalties after their rental property was sealed. The tenant paid rent for seven months but stopped payments for the remaining five months of the financial year. The owner also incurred significant conversion charges as a penalty. The advice suggests that while actual rent received is taxed, rental losses due to non-payment might not be directly deductible. However, the MCD penalty could potentially be treated as a business expense or capitalised as an improvement cost against the property for future capital gains tax.

  1. The actual rent received is only taxed while the loss in rent  cannot be booked.
  2.  The amount paid to MCD can be cosidered as expense under Business head, but not under IFHP.
  3.  The cost can be capitallized as cost of improvement against property, which gets set of against capital gain when sold or transferred,

Thank you for your kind reply. 

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