Home Loan Tax Benefit - No rent received

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Roshan asked 9 years ago

This (2016) October I purchased a flat in Cochin.Started paying EMI from November.Will be paying around Rs 171000 this financiaal year as interest.Right now the property is not rented out.I am staying in a rented house in Chennai as my office is in Chennai.When I get a tenant I will let out this property.If there is no rent received this financial year how can I calculate the exemption for home loan interest? If I receive rent for 2-3 months this financial year how will I calculate my exemption? Please advice.

2 Answers

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Sreekanth Staff answered 9 years ago

Hi, You can declare this property as 'Let-out property kept vacant' (or) 'Let-out property kept vacant for part of the year'. Let-out property kept vacant : In this case, income from house property can be calculated as;

The annual rental value is NIL
Can deduct municipal taxes or property taxes
Can claim Deductions u/s 24 - Interest payments ; no ceiling limit.
Can not claim 30% standard deduction.

Let-out property kept vacant for part of the year : In this case, income from house property can be calculated as;

The annual rental value is actual rent received for the let out period.
Can deduct municipal taxes or property taxes
Can claim Deductions u/s 24 - Interest payments ; no ceiling limit.
Can claim 30% standard deduction.

Principal component of Loan can be claimed u/s 80c. Read: http://www.relakhs.com/understanding-tax-implications-of-income-from-house-property/

Roshan replied 9 years ago

Hi Sreekant,

Thanks a lot for the quick response.So in the first scenario if I am not getting any rent from the property I can claim full exemption for my interest, right.? Since there is no rent I cant make any deductions for municipal taxes right?

Regards
Roshan

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Sreekanth Staff answered 9 years ago

Dear Roshan, You can claim Property taxes but not 30% Standard deduction on rental income (as it is NIL). You can claim interest payments (full) .

Roshan replied 9 years ago

Thanks, That means if rental income is 0 then I can add the taxes to interest and claim total amount

Sreekanth Staff replied 9 years ago

Yes dear Roshan..