We often get to hear a term called as ‘Self occupied Property (House).’ This comes into picture, when we talk about, House Rent Allowance (or) while calculating the Income from House property (or) while claiming the tax deduction on home loan interest amount.
So, what is a Self occupied property in terms of Income Tax?
Definition of a Self occupied property (SOP)
A self occupied property is one which is owned and used by you for your own residential purpose. You have to occupy the property throughout the year. Thus, a property or a house not occupied by the owner for his/her residence cannot be treated as a self-occupied property.
There is an exception to the above rule. If the following conditions are satisfied then the property can be treated as self-occupied and the annual value of a property (considered while calculating ‘Income from House Property’) will be NIL.
- If you (tax payer) own a property;
- If such property cannot be occupied by you, by reason of the fact that owing to your employment, business or profession carried on at any other place (other than the place where your self occupied property is there), you have to reside at other place in a building not owned by you;
- If the property mentioned in (a) above is not let-out at any time during the year. (The property should not be let-out fully or part thereof);
- No other benefit derived from such property.
(The Gross Annual Value (GAV), also called just the Annual Value, of a property is used in calculating the tax or rent which should be applied to the property).
Let us now understand few more points on Self-occupied property, like –
- What if I have one or more self-occupied properties? Which one should I choose as self-occupied property?
- Is my HRA fully taxable if I have a self-occupied property?
- How much can I claim as Income tax deduction under Section 24b, on the Interest amount paid for my home loan?
- If my self-occupied property is partly Let-out, what are the tax implications? Can I consider it as both let-out as well as SOP for claiming tax deductions?
- My self-occupied property is jointly owned (co-owned) then what are the tax implications?
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Do you own one or more Self occupied properties?
You may have a query like this one – ‘I own a house in Bangalore and plan to purchase another one. From income tax perspective, how many houses can be treated as self occupied? ‘
Answer is, only one residential property can be claimed as self occupied. Even If you occupy (or may be your parents) more than one property for your residential purpose, only one house is treated as Self Occupied Property. Which one to choose as SOP? It is left to your discretion. The other(s) are treated as “Deemed to be let out” (DLOP) properties.
You also need to know that you may also have to pay wealth tax on the second house as only one residential property is exempted from it. However, if you give your second house on rent for more than 300 days in a year, it will not be subject to wealth tax.
Self occupied house property for business purpose?
If you use your SOP house for carrying on your business/profession then income from such property is not chargeable to tax under the head “Income from House property.” (This is covered under the head Profits & Gains of Business & Profession).
Self Occupied Property & HRA (House Rent Allowance)
If you live in your own house, the HRA given by your company is fully taxable. In this case, you are not entitled for HRA and the entire HRA amount is taxable. There are few exceptions to this, as below.
- What if you own a house and you are employed in a different place/city? In this case, you can claim HRA exemption.
- You may occupy a rented house and you may also have a own property in the same city/town. Then, in this case, are you entitled for HRA exemption? Is it taxable? First thing is , your self-occupied property will be treated as a ‘let-out’ property (even if it is left vacant). Secondly, you are entitled to receive HRA and it is not taxable. But, do remember that this is a tricky situation. Your reasons for staying in a rented house should be reasonable and justifiable (during tax scrutiny, if any).
- Another scenario can be – you stay in a rented property in a different city (due to your employment/business requirements) and your family (parents) stay in your own self occupied property. Under this scenario, you can definitely claim HRA exemption. Your own house is treated as SOP and annual value is treated as NIL. Even if your own property is kept vacant, it is still treated as SOP only.
Self Occupied House/Property – Home Loan – Income Tax Benefits
I f you have taken a loan to purchase your Self occupied property, you are eligible for few income tax benefits/tax deductions.
- The Interest payable on home loan of a ‘self–occupied‘ property ‘ can be claimed as tax deduction. Under Section 24 (b) of The Income Tax Act. Tax Deduction on home loan interest for a self–occupied property is up to Rs 2 lakh.
- Under Section 80C – Deduction on repayment of principal amount on home loan is up to Rs 1.5 lakh.
- To acquire self occupied property, If you go for a joint home loan along with your spouse in the ratio of let’s say 50: 50, then both of you can claim these benefits separately. So the combined limit will be Rs 3 lakh (principal component) under Section 80C and 4 lakh (Interest component) under Section 24.
(If you take home loan for repair/renovation/reconstruction of your self occupied house, then the maximum Tax deduction limit on account of interest is Rs 30,000 only)
Self Occupied Property – A portion of it is Self-occupied & another portion is Let-out: Tax implications
This scenario can be like this – You have bought a two- storey (floors) building through a home loan. You have occupied one floor and rented out the other one throughout the year. In this case, income of each portion has to be computed separately, as if the let-out portion were Let-out property and the Self-occupied portion were SOP.
How to claim housing loan interest on this partly let out property? The home loan interest amount can be apportioned (shared) between the let-out portion and SOP.
For Example : Mr Kejriwal owns a Duplex Flat in New Delhi, which has two floors with separate entry for each floor. He has given one floor on rent and another one is self-occupied by him. His housing loan interest amount is Rs 5 Lakh in a Financial Year. Can he claim interest amount for let-out and self-occupied portions separately?
The answer is, YES. The property is treated as 50% let-out and 50% as SOP. The total interest amount has to be divided equally i.e., Rs 2.5 Lakh per portion.
The maximum interest amount that he can claim u/s 24 (b) for self occupied property is Rs 2 Lakh only. So, out of Rs 2.5 Lakh, he can only claim Rs 2 Lakh as tax deduction.
There is no maximum ceiling limit (on interest amount) for Let-out portion. So, He can go ahead and claim the entire Rs 2.5 Lakh as tax deduction.
(Kindly note that the apportionment of the interest amount can be done based on plinth area (or) built-up floor area (or) any other reasonable basis).
Self Occupied Property – Partly Let out & Partly Self occupied (Time-basis)
If your property is self-occupied for part of the year & let-out for remaining part of the year, then the income from your House property shall be calculated for the whole year as ‘Deemed Let-out Property’ only. There won’t be any ceiling limit to claim tax deduction on “payment of interest amount” on your home loan. So, it is not treated as Self Occupied Property.
Latest news : Budget 2016-17 – Home Loan Tax Benefits & Self Occupied Property :
Existing rule : To claim tax benefits on home loan of a Self-occupied Property, the construction has to be completed within 3 years from the end of the Financial Year in which the capital (home loan) borrowed.
New Provision (effective AY 2017-18) :
In view of the fact that housing projects often take longer time for completion, it is proposed that clause (b) of section 24 be amended to provide that the Deduction under the said provision on account of Interest paid on Home Loan for acquisition or construction of a self-occupied house property shall be available if the acquisition or construction is completed within FIVE years from the end of the financial year in which capital was borrowed.
This amendment will take effect from 1st day of April, 2017 and will, accordingly apply in relation to assessment year 2017-2018 and subsequent years.
Did you find this post informative? Kindly share your comments 🙂
(Image courtesy of iosphere at FreeDigitalPhotos.net) (You may like reading my post on “How to unlock your property value?“)
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I have a housing loan with a nationalised bank. I had repaid sum of Rs. 4.21 lacs in the month of July 16 and thereafter no repayment has been made.
The bank issues me certificate of loan repayment for 4.21 lacs with Principal repayment of 373000/- lacs and Rs. 48000 towards interest stating that the interest repayment is considered upto June 16 as interest repayment for further period is not done. however my loan account shows debit interest from July till March 17 which is stated to be unpaid as no repayment has been done after July 16
Is the bank right in issuing such certificate or am I eligible for the entire rebate of interest charged to my loan account during the financial year 2016-17
Please guide
Dear VASANT .. You can claim entire interest payment done in FY 2016-17 (subject to ceiling limit of up to Rs 2 Lakh if it is Sop).
Kindly read : IT deductions list for FY 2017-18.
Hi Sreekanth,
I have 1 SOP in HYD and other one getting ready in BLR(work location),
1. in HYD Jointly owned by me and my dad, though i am paying the complete EMI(HDFC), so far i am claiming the complete TAX benefit. My parents are staying here, so SOP
2. BLR one yet to get ready and registration is pending(another month), will be staying there. This one is loaned from SBI(self) and i am paying a pre EMI so far without any benefit. This will be converted soon to actual EMI once process towards registration and will be SOP.
So far i understand that only one property can be claimed as SOP and other will be LOP/DLOP.
I am confused on which one to declare SOP and which one DLOP. How can i get most of TAX benefit out of these. My HYD house loan is very less compared to BLR house.
Have few questions
1. Should i declare my BLR house as SOP once occupied or declare it now, anyways i will be moving next month. As this one has greater loan amount.
2. Which part of loan(int/principal) can i claim for my HYD house. under which section
3. How can i claim my pre-EMI amount. i heard i can spread the interest paid so far into 5 years after occupation. but under what section.
Regards,
Mohan
Dear Mohan,
Kindly note that from FY 2017-18, the maximum loss on income from house property (properties) is up to Rs 2 Lakh only.
So, if you are paying interest payments of more than Rs 2 Lakh then it does not make any difference as of now. But anyways you can claim the property which has higher loan amount as Let out one and claim the other one as SoP. (Tax laws may change any time 🙂 )
Kindly read :
Income form house property & tax implications.
IT deductions list for FY 2017-18.
Under construction property & tax implications.
Thanks for the reply, will go through the articles
DEAR SIR
MAY I KNOW .. I AM A DOCTOR HAVING LEGAL OPD CLINIC BUSINESS (PARTIAL AREA) IN RESIDENTIAL FLAT AND AT THE SAME TIME I HAVE HOME LOAN ON FLAT. CAN I CLAIM DEPRECIATION FOR THE PART USED AS OPD CLINIC
DR. KIRTIKUMAR PILANKAR
Dear KIRTIKUMAR .. Kindly consult a CA.
Hi Shreekanth,
Before I post my Query, A Great thanks for helping us out with your valuable suggestions.
I currently stay in Greater Noida ( Delhi NCR ) and possess a Flat for which I pay Home Loan. I now want to shift to my parents place by paying a Rent to my Mom ( Around INR 12K – 14K ) which is in a different City (Ghaziabad) but in Delhi NCR itself.
The reason for shifting is that I want to be with my parents, but since my Dad is retired I dont want to financially burden and hence would be paying the rent and this would make my flat be Empty ( Which is fine with me)
My Query is that Can I claim both HRA & Tax Benefit on my loan and would there be any IT implications in doing so.
Dear Prateek,
Yes, you can claim tax benefits & HRA, both.
Hi Sreekanth,
First of all let me congratulate you on helping us out.
I am facing a problem and I seek a solution for it.
I purchased a piece of land and constructed a house over it. I took a joint home loan with my spouse for the construction. The initial loan was from HDFC wef Jul 14 which was transferred to LIC wef Jul 16.
At the time of claiming IT rebate i submitted a completion certificate with an issuing date of Mar 16 along with LIC documents of Jul 16. Now my accts dept is treating my house building loan as loan taken for repairs and giving me a benefitn of 30,000 only. Please guide me.
Thanks
Dear Rohit,
May I know the reason stated by your Company’s Acc dept?
Did you get the possession of the house?
Here my current situation….
I own two homes in the same city (joint home loans with spouse). I stay rented at a different home in the same city.
What we pay –
Home 1 – Around 2,00,000 interest
Home 2 – Around 7,00,000 interest (including pre-emi calculations)
HRA – Around 2,50,000 a year (after all hra calculations)
What we receive –
Income Home 1 – Around 1,75,000 (after deductions etc)
Income Home 2 – Around 2,25,000 (after deductions etc)
Question 1- Can I declare HRA and home loan interest in the following manner…
Self – Interest for home loan 1 and home loan 2 (2,00,000 + 2,00,000) & declare income of home loan 1 (1,75,000)
Spouse – HRA (2,00,000) and home loan 2 (2,00,000) & declare income of home loan 2 (2,25,000)
Any insights will be much appreciated.
Dear Raghav,
May I know who is receiving HRA? Are properties jointly owned?
For FY 2016-17 – Interest payments of Rs 2 Lakh and Rs 7 Lakh can be claimed fully u/s 24.
From FY 2017-18 – this will be limited to Rs 2 Lakh only.
Kindly read: Budget 2017, key Direct Tax proposals.
Thanks for the answers…
May I know who is receiving HRA? Are properties jointly owned?
The property is jointly owned.
For FY 2016-17 – Interest payments of Rs 2 Lakh and Rs 7 Lakh can be claimed fully u/s 24.
From FY 2017-18 – this will be limited to Rs 2 Lakh only.
isnt it 2 lakhs limit only for the let our property ? In my case doesn’t this become 4 lakhs since it is joint home loan?
Also for self occupied it is again another 2 lakhs right ?
Dear Chintu / Raghav,
(Kindly post your queries/responses with the same Displayname)
Yes, each tax assessee would get to claim up to Rs 2 Lakh. In jointly owned property, it is up to Rs 4 Lakhs (for both owners put together).
However, I believe that this Rs 2 Lakh limit is for all the multiple properties owned by the individual.
Hi Sreekanth,
I have a home loan for self occupied flat for which I am taking tax benefits. Now I am planning to take up top up loan.
I learnt from nationalized bank that there will be separate account for top up loan. In such case, bank would issue two separate interest certificates. So, how can I take additional tax benefit for top up loan? Can I show two interest certificates for tax benefit for self occipied flat?
Kindly advice.
Regards
Thanks
Madhu
Dear mtl,
Yes, you may do so, but up to Rs 2 Lakh u/s 24 for interest payments.
Hi Team,
I need some help from you, its related to Let out property. Actually I have two flats one I have purchased in 2014 and got the possession for the same in April 2016 and in Aug, 2016 I purchased another flat. Both the flats are in outskirts of the city so both have been rented out. This time I was able to declare only one flat in Let Out Property as for the other flat I am yet to pay the property tax and EB name transfer is also not done. So my questions are:-
1. Can I declare both the properties as Let Out and also claim HRA because I am staying in rented flat near to my office and both my flats are more than 30 kms hence I need to rent both of them.
Note: In my company portal while declaring Income tax, I was able to submit details for only 1 flat only so the company HR told me that I can claim for other flat while filing returns.
2. As for the year 2017-18, govt has put the cap of 2 lakh on the home loan interest on Let Out properties similar to Self Occupied property so I wanted to know if I show both the properties as Let Out then 2 lakh interest cap is overall or this limit is for each property?
3. Can I show the pre EMI interest for my first flat for which I had taken loan in Jan 2014 and I got the possession of the same in April 2016? As I didnt submit or declared anything in Income tax for my first flat in 2016, can I declare the same (pre EMI, interest paid, princial paid) in FY 2017??
Dear Hoshang,
1 – Yes, you may do so.
2 – I believe it is for overall. Read : Budget 2017 & important Direct Tax proposals
3 – Kindly read : Under-construction property & Tax implications.
Thanks a lot Sreekanth for your quick response. I also want to know as the overall cap is of 2 lakhs for LOP(whether there is one or more) so how this carry forward of loss of interest amount resulting from multiple properties will work? I know that we can claim it in 8 subsequent years but i want to understand how it will work because if a person is paying 4 lakhs of interest on LOPs after deducting rent and 30% NAV still he will be paying more interest only which means atleast for next 3-4 years he will be paying more tax as the limit is only upto 2 lakhs. So that carry forwars benefit will only benefit of the net loss from LOP becomes less than 2 lakhs.
Dear Hoshang,
Your understanding is correct.
That’s why in most of the cases (major part of home loan tenure), these loses can be just Dead loses.
Hi Sreekanth,
I live in bangalore, I have an apartment , which is let out. Also I have a house in a plot in the suburbs. However I stay close to the office in a rental home to avoid traffic. Both properties are owned fully by me. The house in the plot is vacant . I should be able to get treat the interest on home loan for the vacant house in the plot as self occupied house, then the apartment as let out along with HRA. Kindly provide your guidance.
Dear Arvind,
You can claim HRA and treat the two properties as Let-out ones.
Read:
Income from house property & tax benefits.
Budget 2017 limits loss on property to Rs 2 Lakh!
I own 2 House Properties. 1 in my name and the other is jointly owned by my Son. I reside at Property 1 which is owned by me (SOP) and my son resides at Property 2. Will property 2 be considered as DLOP for me? If yes till what extent?
Also can my son claim it as his SOP and still do I need to consider it as DLOP?
Dear Jinav Ji,
As you own two houses, and you are declaring the property solely owned by you as SOP, the other property has to be declared by you as DLOP only. I believe that he can declare it as his SoP.
Dear Sreekanth ji,
If my Son will declare it as his SOP do I still need to declare it as my DLOP? Can one property be both SOP and DLOP?
Thank You for quick reply
Dear Jinav ..Yes, it can be.
Hi Shreekanth,
I have 2 flat in the same locality. In both the flats my wife(Housewife) is a co-owner.
1st one has no loan but rented out. The other one is SOP and there is a home loan on it.
How much share can I can show for my in Income tax for the first flat.
Thanks in advance.
Dear Gaopal,
You have to declare rental income as per your share in the property (first one). By default it would be 50:50.
I am central govt employee and living in govt alloted house in delhi , can i claim rebate on income tax from interst part part of housing loan from bank in NCR region kindly clearify under section 24
Dear Mr Pant..Are you declaring it as a Let-out property?
I have a flat in Nasik an Pune on which Home loan is availed. I work in Pune and I am staying in a rented property.
Can I claim Interest on Housing Loan for both properties and also avail HRA.
Dear Tejaswani..Yes, you can declare both the properties as Let-out one and also claim HRA.
I am a retire scientist but staying in a rented house. I HAVE own house which is 7 km away from the rented house in the same place. Kindly advice me can I avail house rent claim of Rs 5000/per month.
Dear Karisiddaiah,
Yes, you can claim HRA as the own house can be declared as Let-out property in ITR.
i staying in Pune city Goverment Quater i had not received HRA & I purchased one house property in same city can i claim interest exemption u/s 24.
Reply
Dear Smita,
Yes, you can claim ..
Hi Shreekanth,
I have got the possession of my unit in Gurgaon few days back. I am planning to put it on rent, however not sure if i will get tenant by March or it will be vacant for FY 16-17. I am staying on Rent in Noida and would like to know if i can claim the unit as let out or deemed to let out unit and claim the entire Housing Loan interest paid u/s 24 + pre construction interest (1/5th) to claim it as a part of let out property. Or will it be considered as Self occupied property if it stays vacant till March.
Thanks
Deepak
Dear Deepak,
You can declare it as a Let-out property kept vacant and claim interest payments u/s 24. (Rental income would be NIL).
Thanks Shreekanth for your prompt reply. So it means i can claim the entire interest paid (3.5 lac) for this FY and not just 2 lacs as per self occupied rule.
Best Regards,
Deepak
Dear Deepak,
Self-occupied rule?
In case, you declare it as SoP then ceiling limit would be Rs 2 Lakh only.
Kindly read: Budget 2017 & Key direct tax proposals.
Hi Sreekanth,
Request you to kindly answer my query as below.
There is one property in Delhi which is registered on my mother’s name only, however, in the housing loan against that property I am the primary applicant and my mother is mentioned as a co-borrower.
I just wanted to check if
1 – I can take the deduction (100%) for the interest paid on housing loan.
2 – If I can split the deduction (50:50) between me and my mother.
PS – Provisional Interest Certificate issued by the bank has both of our names in it.
Dear Amit,
1 & 2 – No. As you are not co-owner or owner of the property (Kindly read : Joint home loan & tax implications)
Hi Sreekanth!
Please review the following case :-
A company owns two flats, for one of the houses, bank loan was taken for construction. House No. 2 is given on a monthly rent of Rs 10,000.
In the Agreement of purchase, house is meant only for residential purpose.
1. Will there be any income under Income from House Property?
2. Will interest on bank loan be allowed as an expense while calculating Gross Total Income of the company?
3. Will the first house against which bank loan is obtained be treated as an SOP? I dont think a company can possibly own a SOP
Dear Sagar,
It has to be treated as commercial property and let-out one.
Read: Income from house property & tax benefits.
Dear Sreekanth,
As it is to be treated as commercial property, interest expense will be allowed under Business or profession right? The flat will be used for residential purpose of employees and directors.
I am aware that rental income of Rs 10000 per month from House no 2 will be taxed under Income from House Property.
Dear Sagar..Suggest you to consult a CA in person and take advice.
Dear Sreekanth
Thanks for such informative detail.
I have a query , currently i have a home in bangalore which is purchase with a loan and have claimed the IT rebate on that interest and principle .
I too have bought a property in Cochin which is rented out , will it possible to claim exemption on the 2nd home and what additional benefit will i be able to claim form the 2nd home .
Can you guide me .
Thanks
Dear Sandy,
Have you taken home loan on the second property too?
Kindly read: Income from house property & tax benefits ..
Hi Sreekanth
Yes i have taken loan on the 2nd property and it is rented out , the house i am staying is declared as SOP and has the highest interest so have been using that for the 2 Lakh exemption .
Dear Sandy,
You can claim interest payments as tax deduction u/s 24 on second property as well.
Kindly read: Income from house property & tax benefits.
Kindly note that Budget 2017, has been proposed to limit the loss from ‘income from house property’ head to Rs 2 Lakh only and the unclaimed loss can be carried forward to next assessment years. This would be from AY 2018-19 onwards.
Hi,
I live on Rent in Noida and I have my own flat in Greater Noida. My flat is right now vacant.So, can I claim both HRA and Housing Loan Interset? Are Noida and Greater Noida treated as different cities or same?
//Thanks
Dear Amit,
I believe that you can claim HRA & declare the own property as ‘Let-out property kept vacant’.
Hi Sreekanth,
I bought an under construction house in Oct 2016, home loan sanctioned in Oct 16. I started my EMI (principal and interest) from Nov 16. My question is can I claim u/s 80EE in this year or next year. Since my house is still under construction and expected to complete next year, my expected principal and interest comes to only Rs. 1.15 lacs which is less than the limit of 2 lac (incl 80EE). Hence, can this spill over be claimed in next year. I am not exceeding 1.50 lac in this year and I missed the 80EE benefit. Whereas next year payout would be definitely more than 1.50 lac, hence since I didn’t claim 80EE this year, can I claim 80EE benefit next year.
Dear Neema,
The law is silent on the point that whether this Section is applicable to already constructed houses or under-construction house. In the absence of any specific instruction, it is always assumed that it is applicable to everyone i.e. it is applicable to all types of houses.
First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
The home loan should have been sanctioned in FY 2016-17.
Loan amount should be less than Rs 35 Lakh.
The value of the house should not be more than Rs 50 Lakh &
The home buyer should not have any other existing residential house in his name.”
Hi Sreekanth,
I own a house in Bangalore which I have given on rent and I live myself as well in a different rented apartment in Bangalore only, In this scenario can i claim HRA and Housing Loan Benefit by showcasing my own house as let Out ?
Dear Sumit..Yes, you can claim both..
Hi,
I was living on rent for the period Apr-16 to Jun-16 and then I got possession in July and shifted to own house. Can I claim HRA for the said duration and simultaneously claim deduction under sec 24 for house LOAN INTEREST.
Thanks.
Dear Shwet..Yes, you may do so.
Dear Sir,
I have my own 1 BHK house (loan free) in pune but due to big family we have shifted to 2BHK home in (Same building). Also We have not kept/given our own 1bhk in rent.
Please let me know can i claim HRA for the rented flat.
Dear snehil ..Yes, you can claim HRA and declare your own property as Deemed to be let-out one.
Me and my Husband both are working and we owned 2BHK flat in Pune. Both of us has taken loan wherein he is Principal borrower and I am secondary.
Its a newly constructed building which has completed on 10 Oct 2016. We have bought this flat for our own stay. Will I or husband be liable to pay property tax?
If yes, Can you please explain how we calculate property tax, supposing the value of the property is 55 Lac?
Dear Archana,
Yes, you can deduct the property tax when calculation your ‘income from house property‘.
For Property tax details you have to visit your nearest Pune Corporation office/help centre.
hi Sreekanth,
I own a flat in Mumbai where my wife and 2 children live. I work and stay alone in Pune, and am renting an apartment there. I bought a second flat in my building in June 2016 where I plan to bring my aged mother. I took a loan for the second flat and paid it off in Oct 2016. The interest amount paid is around 31,000.
1. Can I claim HRA exemption for the rented flat in Pune.
2. Can I claim exemption under Section 24 for the Interest paid towards my housing loan.
Dear Vicky,
You can claim HRA for the months of Arpr & May.
Yes, you can claim tax deduction u/s 24 (provided it is not an under-construction property and the possession is given).
Sreekanth,
Thank you for your quick response.
The two flats i Own are in Mumbai, whereas the flat I am renting is in a different city, Pune. Can I not claim HRA for the full year Apr to Mar?
Hi Sreekanth, many thanks for your article. Helpful – but just to double check, please help address my query as follows. I have 2 properties – 1 in Noida and 1 in Gurugram. I live with my parents in New Delhi. The Noida property has been rent out for entire 12 months and the Gurugram property for 7 months. I understand from this article that none of them can be claimed as SOP and rental incomes from both properties will be needed to be shown in ITR submission. Please help to confirm the understanding. If I have understood incorrectly, please advise for the same. I don’t have any outstanding loans on both properties. Thanks and Regards, Amit
Dear Amit,
Yes, you can declare both properties (own) as Let-out ones and rental incomes have to be shown in your income tax return.
Hi Sreekanth, many thanks for your kind response and confirmation. Regards, Amit
Hi Sreekanth,
I have taken a home loan jointly with my mother for a property in Ranchi (in me & my mother’s name (Co-Owners)). I live in Bangalore in a rented flat. I am producing a declaration from my mother that she is not claiming any tax benefits from this property(As suggested by my company’s finance dept). My questions are:
1. Can I Take benefit for both – HRA and Home loan (as My parents are staying in the owned flat in Ranchi) ?
2. If I declare it to be let-out property, can i show the income from rent as 0 (zero)?
Also, please mention any special the documents/declaration I need to furnish.
Dear Ranjan,
1 – Yes.
2 – No. You need to declare rental income.
Sreekanth garu,
Thanks for the most informative document, request you to answer my query.
I bought a house in my home town and gave it for rent (8000Rs/month), I am paying loan on the same, Principle : 39416 Toward Interest : 362499.
I am staying in another place for work purpose and paying rent and claiming HRA for it, my query is, how would tax interest part be calculated on the loan amount considering 39416(principle) would go in 80C?
would it be Interest – rent received = tax benefit?
362499-96000=266499
Dear pavan,
Yes, EMI has two components namely Principal & Interest repayments.
Principal part can be claimed under section 80c.
Interest repayments can be claimed u/s 24.
Suggest you to read this article : Income from house property & tax benefits.
Hi – I have a house with 2 floors. I live on Ground floor and Tenants have occupied 2nd and 3rd floor. Though my house stands on a single site does it come under the definition of ‘ one property’. Can I use ITR 1 in this case to file my returns where I can club both the rents and show as ‘ one’ from let out prop?
Regards, John
Dear John,
I believe that if property is entirely self occupied or entirely let out. ITR-1 is an appropriate form (subject to other conditions).
Kindly read : Which ITR form to file?
Dear Sreekanth,
Thank you for sharing the knowledge you have acquired and doing this service.
I have one doubt and need further clarification, in this regards.
I am a salaried person, lives in Delhi. I own a house where the ground floor is a let out property and the 1st floor used for residential purpose by me. For the rental, I am already paying the tax due to which I received lesser amount every month as compared to the original rent agreement.
So my query is:
1) While filing the return, do I need to pay the taxes again as “income from property” or it can exempted by submitting the tax deduction calculation sheet received from the let out party.
Also, I get the tax deduction details after completing the 2016 financial year, so do I need to mention this in my office tax declaration form or it can be showed while submitting the return file?
2) In the current scenario, is there any way by which I can avail the benefit of HRA too?
Dear GKumar,
I am unable to understand this “For the rental, I am already paying the tax due to which I received lesser amount every month as compared to the original rent agreement.” ??
You can declare it to your employer and if that is not possible, you can disclose when filing your income tax return.
2 – As you are residing in your own house, kindly note that you can not claim HRA.
Hello Sreekanth,
I have a home loan and currently my employer is asking for the PAN details of lender (SBH in my case) as per the new notification S.O. 1587(E) dated 29th April 2016 (#2. (3)) . The Bank tells me that they do not share the PAN details. Who is right and who is wrong?
BR,
Nithin
Dear Nithin,
Your employer is correct.
Hi SreeKanth,
Thanks for the very informative article. Here is my query,
I bought an apartment during May 2016 in the city where I live. As the apartment was in finishing stage I didnt take moratorium period for my housing loan. I started paying EMI from June and received possession of the apartment in Oct 2016. Currently interior work is in progress and I stay in a rented house. Apartment would be ready by Jan 2017 end and am planning to occupy by Feb 2017. my query is
1. Will I be able to claim HRA for the period April 2016- Jan 2017? and also housing loan interest
2. Can I claim whole interest paid for the FY year or only 2 lakhs, or any other ? .
3. how would you call this case? is it self occupied property kept vacant?
Looking forward to hear from you. Thanks in Advance
One more question, as am not sure if I will occupy my house or rent out.
1. In which case I can claim full HRA and full interest paid for loan, is it for self occupation of property or for let out. ?
In both case I can do only from February 2017. On Tax beneficial wise which is better. Please suggest.
Dear Sbanta..From taxation viewpoint alone, renting out can be a better option.
Dear sbanta,
1 – Yes, both can be claimed.
2 – If is for self-occupation then Rs 2 Lakh , else entire interest payment can be claimed.
Read: Income from house property & tax benefits.
3 – What is your plan? Are you going to give it on rent?
Hi Sreekanth,
This is Surya from Bangalore. I purchased 2BHK in Bangalore, in that my parents are staying. I am staying in rented house. can I claim both HRA and home loan benefits?
Dear Surya,
You may claim HRA and declare the own property as Let-out one to claim tax deductions. Kindly note that you then need to declare Rental income too.
In case, you would like to declare it as a SOP, you may have to justify your claim of HRA & tax exemption on SOP. (this can be possible, if your property is far from your work location).
Hi Sreekanth,
I have a flat in banagalore (presently staying). I have also purchased a house in Kerala this year(parents staying )
Interest paid on Kerala home loan is more compared to Banagalore.
Do i need to show one as Let out property… If yes which one should i go for. Is there a minimum value on Annual Lettable Value?
Please help
Additional Info- Interest on housing loan(Kerala)-170211/- & Interest on housing loan(Blr)-49448/-
Dear Sujith,
You have a choice to opt for either of your SOP as let-out one.
You can declare kerala property as Let-out one.
Kindly read: Income from house property & tax benefits.
HI Sreekanth, I have 2 flats on my name (Bank loan paid off) in same city and 3rd co-owned with my wife on loan with EMI 48k in same city. We live in 4th flat in same city owned by my wife on her mainden name. How can I and my wife claim tax benifits considering all other 3 flats r on rent.
Dear Samuel,
Kindly read: Income from house property & tax implications.
HI Sreekanth,
Can I show 1 of the flat as self occupied while both flats on my name are rented out. Similarly my wife can show self occupied the flat where we live in which is on her name and others as let out?
Dear Samuel,
The SOP declared by you/your spouse should be same.
Thanks for wonderfully explained article! I got one query.. could you help on this..
I have two properties. Both co-owned. One co-owned by me and my wife (it is self occupied). Other property is co-owned by me and my mother (which is occupied by parents. note: mother is co-owner).
In this case, can I assume both as a SOP for tax purpose too? thanks in advance.
Dear Sumit,
Any of one of the properties has to be declared as Let-out one.
Hi Sreekanth,
We have taken a joint housing loan (Me, Father & Mother) and the property is in my mother name. I am staying in a different place due to my employment. So can I claim tax benefit for Interest on SOP and Repayment of principle towards housing loan (80c) for my proportion (even bank’s intresent certificate reflects all three names)? also take a benifit of HRA exception? If yes please advise what should i fill in the form of verification for below
– what will be the Income from house property (in case of loss, enclose computation thereof) and other sub items if any
– should I need to submit any other proofs apart from Bank’s interest certificate?
Thought of mentioning loan was taking in 2011 from Bank A and then the hole amount was transferred to Bank B in 2015
Dear Harsha,
As you are not the owner/co-owner of the property, you can not claim tax benefit on homeloan.
You can claim HRA.
Hi Sreekanth,
I have two houses, one in pune and other in Mumbai. In Pune my parents are living and In Mumbai i am staying as my office is in mumbai
now if i show pune’s house as SOP and mumbai one as deemed rented out, can i claim the below exemptions
150000 under 80C for pune house
200000 interest for Pune house
entire interest on mumbai house
HRA exemption for mumbai house (if i show that I have given my mumbai house on rent and i am staying in rented house)
please advise
Dear Kiran,
You have a choice to declare which house as Let-out, but I doubt if you can claim HRA.
Thanks Srrekanth , that helps
Can you also tell me that i can claim stamp duty and registration charges for resale property or is it only allowed for new construction?
Dear Kiran,
One cannot get deduction for stamp duty and registration charges paid for a resold house property.
We (me and my wife) are staying in my parental home. I have acquired our first flat in the same city by taking a joint loan last year. This year, I have given it in rent. I dont claim HRA examption. Now can I claim 2 Lack deduction (interest on home loan) as it no more self occupied? If yes, shall I claim entire 2 Lakh or 2 Lakh-rental value?
Dear Sayan,
If you have given it on rent, you can claim entire Interest payments (home loan) as tax deduction u/s 24.
Kindly read: Income from house property & tax implications.
Hi,
I own two flats in Pune. I got the possession of both flats in 2016. One is 3 BHK (EMI is Rs. 60,000, annual interest is Rs. 6,00,000, it is self-occupied) and second is 1 BHK (EMI Rs. 25,000 and annual interest Rs. 2,50,000, it is on rent and monthly rental income is Rs. 10,000)
As per Income tax law for self-occupied property I can get tax benefit Rs. 2,00,000 (max) on Interest component but for let out property it is full interest component.
In my case, to save max income tax shall I show my 3 BHK as let out and get full interest benefit (although it is self-occupied)?
Please confirm.
Thanks
Paresh
Dear Paresh,
Yes, you may do so.
Thanks Sreekanth for quick reply. Are you sure it is correct as per Income Tax Law? As I gave 1 BHK on rent and use 3 BHK for self but then how I can show 1 BHK for self and 3 BHK on rent? Rent of 3 BHK is around Rs. 15,000 but from 1 BHK I am only getting Rs. 10,000. Please confirm
Hi Sreekanth,
I Purchased flat in Chennai for 15 lakhs with loan from LICHFL.
I the same house me and parents are staying.
Last month all of my loan dues got cleared.For this financial year how can i get HRA exception? as well next financial year whether i am eligible to get exception from HRA amount?
Dear Mani,
As the property is self-occupied by you, you can not claim HRA exemption.
Property should not be in your name to claim HRA, if you wan to avail it then you would have to transfer the property to your parents name.
Hi Sreekanth,
I am having 2 houses in different cities.
One house in am staying due to my professional reasons for last 2 years.
The other house-is in my hometown and been in my possession / title for more than 12 years.
In the latter house my mother stays and me & my family stay during our visit to home town – the cumulative duration of the stays in the house in my hometown usually exceeds 60 days in a year.
Under this circumstance what is my tax implication and corresponding IT Act section / clause nos.
I am having no loan on any of the houses.
Can you please respond to my query.
Dear Pramit,
As both of the houses are self-occupied, you have the option to choose either of the properties as SOP and the other one as Let-out one.
Hi Sreekanth,
I have a question. I have a two storied house which I have taken on loan with joint ownership of my wife and my father. I am paying the housing loan interest completely. I stay togethere with my parents in one floor, the other two floor house are being rented out. The entire rent money goes to my parents for their living as they are over 60 years at senior and do not have any other source of income. Currently only I am claiming tax benefits on interest and principal as I am the only earning member. will the rental amount received will also be taxable to me as the house is originally in my name? will I have to show that income as well?
Dear Sumanth,
Joint ownership?
But in the last sentence, you have mentioned that it is in your name?
If you are the sole owner of the property and you are paying the EMIs then you can claim tax benefits.
Also, the rental income has to included in your ITR.
Read: Income from house property ..
Hi Sreekanth,
Thank you for reverting. the House ownership is three people name. I am the primary applicant with my Wife as secondary and my Father the third. as the property papers has my name included, should be declaring the rental income even though I don’t get any and it goes to my Father? Hope this gives better insight.
Dear Sumanth,
If the property is jointly owned then the rental income has to be disclosed in the tax return as per the share of ownership in the property.
Hi , I do have a query. I am buying a house in a different city. This is my first house. I will give it for rent . Can I claim this property as let out property.?
Dear PRABAL..Yes, you can..
Read: Understanding Tax Implications of Income from House / Property
I have received possession of my apartment in June this year. Since, the interiors work is in progress , we will be able to start living there only in Jan next year. Till that time we are in a rented apartment. I want to claim HRA tax benefit till December after which we will move to our own house. Can i also claim tax benefit for interest paid on home loan that I have taken for this house? If yes, how much, please advise.
Dear Meghana,
Yes, you can claim the HRA benefit for the said period.
How much?? – It depends on the loan amount, tenure & rate of interest.
Suggest you to go through the below articles so that you can have rough idea about the tax benefits;
1 – Income from house property & tax benefits.
2 – Under Construction property & tax benefits.
Hi Sree,
I also have similar case- so will there be cap on housing interest on this new property or it will be treated as ” deemed to be let out” through out the year as it was lying vacant for part of the year
My question is whether Meghna can claim interest max 2 Lakhs or there is no cap if we treat it as deemed to be let out
Renu
Dear Renu,
There won’t be any cap if one treats it as let-out or let-out property kept vacant.
Mr. Sreekanth Reddy
I am working in PUNE having property A (1BHK Single owner) in PUNE home loan of property A is NIL.
now i have purchased property B (2BHK joint owner 1st owner is my wife & i am second owner) in PUNE
home loan is on my name because my wife is house wife she is not working women.
but from beginning i am staying in MUMBAI with my family on rent & clamming HRA but working in pune everyday morning i am coming to pune & evening back to MUMBAI.
My property A is vacant & having no any home loan and i dont want to show it in my tax declaration form.
Property B I want to show as Let out property & want to clam tax exemption of 3,60,000/- out of that 60,000/- will be income from rent of property B.
so total exemption i will get will be 3,00,000/-
And i will continue staying in Mumbai and I will clam HRA as usual.
Please note i am having only 1 home loan for my property B.
Is the above condition is OK.
Dear Jay,
My suggestion would be to declare both the properties in your income tax return. It’s good to be honest anytime!
You may declare both properties as let-out ones (vacant one as ‘let out property kept vacant’) and claim HRA too as you are residing in Mumbai.
Read this article : Income from house property & tax benefits @ http://www.relakhs.com/understanding-tax-implications-of-income-from-house-property/
Is there any exemption for self owned self occupied apartment for retired persons? Like property tax, maintenance paid etc?
Dear vyas ..Yes, while disclosing ‘income from house property’ in your Income tax return, you can deduct property tax and 30% standard deduction for maintenance purposes u/s 24.
Dear Sreekanth,
I live in my own house (SOP). I have no home loan, nothing. There is no income for me from my home – I mean no part is given for rent.
Is there any tax rebate for me? Request to inform the details.
Dear Ravishankar ..You can claim municipal taxes (Property taxes) & 30% standard deduction u/s 24.
Read: Income from house property & tax implications.
Hi,
My property (Apartment in Chennai) that was under construction for the last 4 years was handed over to me in April ’16. I moved into this house in Sep ’16. From April ’16 to Sep ’16 I was living in a rented house. Can I still claim the entire interest that I have paid on the home loan as tax deduction or would the cap of INR 2 lakhs apply in this case.
Dear Vikas ..Are you going to claim HRA? You can claim HRA benefit till Sep 2016. When did you take home loan? (Date & month)
As it is a self-occupied house, the maximum ceiling limit applies.
Kindly read:
Under-construction property & tax-implications.
Income from house property and tax implications.
Dear Sreekanth,
Thank you for your quick response. Truly helpful.
Regards
Vikas Radhakrishnan
I am having an income of Rs.20000/- from a property jointly owned in the name of my wife and myself. Can I show half of the income from rent in my income and rest in my wife’s name. My wife does not have any income.
Dear Arun…Yes, you can do so.
Hi Sreekant,
I am staying in company quarter allotted to my wife (Perquisite) in City A. We will get possession of our 1st and only property (we both are co-owners and co-borrowers for this) in Dec-2016 which is also in City A. If we continue to stay in my wife’s company quarters and give our owned property on rent, can we claim full interest exemption (without any limit) on the home loan. Can you help me plz on this.
Yes, both of you can claim the tax benefits, dear Abhi.
Hey Sreekanth, thanks for the quick response. Can you plz elaborate a bit further as to under which clause we both can claim full interest exemption. Suppose 8 Lacs a year is the interest due, so we can claim the tax benefit on this full amount. Plz confirm.
Dear Abhi,
Yes, both of you can claim in the ratio of your shares in the property. By default it is 50 : 50 under Section 24..Both of you have to disclose the rental income when calculating the income from house property in your tax returns.
Read below articles;
Income from house property & tax implications.
Under-construction property & tax implications.
Hello,
My mother bought a house some years back and registered me as a joint owner along with herself (However the entire purchase amount was paid by her). I am now planning to buy a house property in my name and will be availing of a housing loan for the same. Will this house be treated as second house property for me? In case I show this as SOP, will I need to pay deemed notional rent on the first house – @50% as I am a co-owner (even though I have not made any contribution towards purchase of the same)? Please let me know.
Thanks,
Rishi
Dear Rishi,
As you are the co-owner of the first property, once you own the second one then it means that you are the owner of two properties.
So, if you show the second property as SOP then you have to declare the other property as Let-out one. (assuming both the properties are in same city or town).
Dear Reddyji,
I want know, if one property owned by husband & one by wife, then will it be considered second property of husband & deemed let-out or will it be considered first property of wife & as SOP.
Dear Manoj..If a property owned by a husband is self-occupied than in that case it is a SOP and the other property if owned by wife, can’t be SOP ideally, the only scenario is if her parents live in that property .
An Assesse pays rent to his parents and claims HRA from his company, Can he claim Housing Loan for the same property on any additions?
Please advise.
Dear SELVAN ..No. The property is owned by??
Hi There,
I completed my Housing Loan on the property bought in city A & it has become the self occupied property.I am planning to give this house to my parents/spouse for staying ( no title transfer will be done) & i will be moving to another rented house closer to my office in the same city A. However my parents/spouse is not going to pay any rent to me for this house.
Can i claim HRA as tax exception? Please advise
Dear Ganesh,
If you can justify your stand, you can claim HRA and also declare your property as SOP (and show ‘income from house property‘ as negative figure in ITR).
dear sir,
i have purchased a property in my home town A. I am living in city B in a government accomodation. Now my sister stays in town A with my parents. Can i lease my house out to my sister. Her company will pay lease to me(the owner). How will i report this income?
Dear anshul ..Yes you can lease/rent it out to your sister. You have to report his as rental income and declare the property as LET-OUT when filing your income tax return.
Read: Calculation of income from house property..
Hi ,
I have a 2Bhk flat, and in this 1 bedroom I let out, so how to show this in tax, As I too staying in same house.
Thanks & Regards,
Ramesh
Dear Ramesh,
You have to calculate the income from each portion separately.
Let-out portion as Let-out property and the Self-occupied portion as Self-occupied property.
Property rent & Interest payments (home loan, if any) can be apportioned between the let out portion and self-occupied portion on Built-up area basis.
Hi Sreekanth,
I live with my parent owned house and claiming HRA as giving rent to parents. but In June i owned a house in same building. the newly purchased house is under renovation and i am not started staying there. Can i make that as Self occupied property and also claim HRA for my parents house where i am staying now.
Regards
Deepak parab
Dear Deepak …No, you can not claim HRA if you are going to self-occupy the property.
Hi Sreekanth Reddy,
I have one house loan and my property in in Indore and that flat is vacant. I am working in Kolkata and staying in rented house. I also want to purchase one flat in Mumbai for my family. How can i get the maximum tax benefit in the above cases.
Dear Teena,
You may declare both the properties as Let-out ones and also claim HRA.
Read:
Income from house property calculation..
Hi Sreekanth,
I’m planing to purchase an under construction property on my parent name but loan will be on my name and I’ll be paying EMI for this property. Since this property will be on my parent name, can I claim HRA for this property when I stay here(after construction completion) as well get exemption on Principal and Interest of EMI both?
Please suggest me to avail more tax benefit ,on whose name I should register this under construction property.
Thanks,
Daya
Dear Daya,
You can claim HRA, meaning you are paying the rent to your parents. They in turn can show it as rental income when they file the income tax return.
As you are not going to be an owner or co-owner of the property, you can not claim tax benefits.
Very informative. I have 2 houses both in the same city. I live in one (SOP) and have rent out the 2nd (let-out). I am retired and have only a pension other than rent from the 2nd house. I have two questions:
1. Can I use form ITR1?
2. If I add the names of my children to the 2nd property will they be liable for tax?
Dear Jay,
1- Ideally you have to file ITR 2A or ITR 2.
2 – Yes, rental income has to be shared as per the ownership ratio. In case they are minor kids, then income from property will be clubbed to your income.
Thank you Sreekanth.
1- Was hoping to hear, even ITR1 will do.
2. Will keep it in my name then.
Will be going through more of your very informative website and might have comments in the future.
Sure dear Jay. Keep visiting and kindly share the articles with your friends.
I have 1 loan free house which I have rented out to Bank staff.
In addition to it I bought second house where I am staying also having house loan on it.
Can I avail tax benefit on second home house loan interest for example the Interest amount is 10 lacks how much of it I can avail as a tax benefit.
Dear Aayush,
The one occupied by you is SOP and the maximum limit is Rs 2 Lakh that can be claimed as tax deduction u/s 24.
Read: Income from house property & tax benefits on home loan.
hi shreekant
I own 20% of a house property while rest 80% own by my mother in delhi. I paying 100% (interest =95000, principle= 174000) loan . but i live in faridabad because of my job and my parents live in that house. i want to claim HRA which i paying in faridabad. simultaneously i am also want to rebate in loan under section 24 (2 lakh ) and 80C (1.5 lakh). Is this possible that this house consider as SOP and i also get benefit of loan deduction.
Dear Devraj,
You can claim HRA as you live in different city.
Ideally, you can claim income tax benefits as per the ownership ratio.
But if you are paying the entire EMIs from your individual account and if your mother is not claiming tax benefits, then you can claim the tax benefits.
thanks,
in which heading should i deduct this HRA
from gross salary or from any other heading as 80GG is for non salaried person and i did not summit my house rent slip to my employer.
Dear DEVRAJ,
Yes you can deduct the tax exempt HRA amount from the gross salary u/s 10 and calculate your tax liability accordingly.
Hi,
I stay in flat in name of my wife, and I have purchased another flat on loan. Can I claim entire interest paid in financial year + Municipal taxes + Standard deduction under section 24 ?
I think flat would be under deemed let out category, so should I have to add notional rent as income if flat is vacant for entire year ?
Dear Hemant ..Are you the owner/co-owner of the new property?
If yes, you can claim the tax benefits. If it is kept vacant, the rental income would be NIL.
Read: Income from house property & income tax benefits on home loan.
My let out flat is in my wife’s name(only) and we both are co applicant in loan.
Can I take loan benefits? EMI is deducting from my wife salary account.
No, dear Gaurav .
Thanks Sir.
Is there any workaround ?
Also want to add that I have only allotment cum possession letter, property has not yet registered.
Dear Gaurav..One needs to be an owner or co-owner of the property to claim tax benefits.
Hi,
I am staying in a flat..SOP and purchased a flat in Delhi but yet to be registered.
For the SOP..i can avail interest of Rs. 2 lakhs and principal of Rs.1.5 lakhs..total = 3.5 lakhs.
What is the best way to use the Delhi flat to reduce income tax?
Thanks
Dear Venkat ..You can treat the new property as Let-out one.
Do you have home loan on the new property?
Read: Income from house property & income tax benefits on home loan.
Hi shreekant,
I have bought one resedential property for investment purpose which I intent to let out. I currently stay with my husband and hence no question of self occupation of the property which I bought. The question is the property which I bought will it be considered as deemed to be let out till the time I actually let it out and as a result can I claim the entire interest (not restricted to 2 lacs).
Dear Mamta,
If you got the possession of the property-2, you can consider it as ‘Let-out property kept vacant’ and claim entire interest amount u/s 24.
For vacant property, the rental income would be NIL. You can also deduct/claim Municipal taxes (if any) paid.
But kindly note that you can deduct standard deduction of 30% for maintenance purpose if the property is kept vacant.
Read: Income from house property & income tax benefits on home loan.
Dear Sir,
I Have Only One Self Occupied Property.
But i didn’t show it in Income Tax Return From Last 10 years.
Because i have no any other House Property. or No any income from House Property
there is any penalty of tax for this ?
Dear Sir,
I have recently owned two flats in the month of July 2015 in the same apartment (one in ground floor & other in first floor). Both the two flats are self occupied (i.e. in one myself, wife and child and in the other my mother and sisters).
There is no home loan on these flats.
Can we treat both the flats as self occupied for the purpose of income tax?
Please guide me.
Dear akksarma,
Where an individual owns more than one self-occupied residential property, any one of the property at the discretion of the individual is considered as a self-occupied property (SOP). Hence, the other residential property owned, even if not actually let out, will have to be considered as a “deemed let out property” (DLOP).
Thank you Sreekanth Reddy garu,
In case of declaring one of my flats as DLOP, what amount should I consider as the deemed let out amount/income? As such I am not getting any income from the house property. Can I show as one rupee? More over, I am incurring apartment maintenance charges Rs.700 per month to each flat , paying property tax Rs.1000 per annum etc.? How to treat these amounts?
Dear akksarma,
You can not mention Rs 1 as rental income.
If you actually let-out the property, you will get some rental income right, you can disclose that amount as your ‘Gross annual value’.
The key point here is, notional or fair rental value of property has to be reported for Income tax purpose.
Fair Rent: It means how much rental income a similar property in vicinity can fetch with similar facilities and amenities.
You can deduct 30% standard deduction, municipal taxes, home loan interest payments from the annual value.
Read: Income from house property & income tax benefits on home loan calculation.
Hi
I stayed for 10 months in rental home and then purchased and shifted there for next 4 months of the year and started paying EMI’s simultaneously. Need clarification on tax benefits
1. under HRA
2. Principal repayment and interest on loan
It is a joint property on me and my wife’s names and we both are working professionals.
Dear Saahil ..You can claim both for the respective periods.
Dear Sir,
Iam working in Hyderabad. I purchased a house in my native place six years back and enjoying the tax benefit till date on interest of approx 1.40 lakhs. My parents are staying even today and I have declared it as self occupied. Recently I have purchased a flat in Hyderabad on 2nd home loan and going to pay interest around 3.50 lakhs. I am physically staying in the second (new) house for which I am paying larger interest on home loan. Now i would like to declare the second house as deemed to be rented out to avail max benefit as IT exemption and continue my previous house as self occupied property where my parents are staying. Is is allowed to declare the residence as a deemed to be let out property? Kindly clarify.
Dear Suresh..Yes, you may do so.
Thank you sir. By declaring my present residence (actually occupied by self) as deemed let out I can save considerable It.
Regards
Suresh
Sreekanth,
I have a home1 in native on which I am claiming IT exemption on house loan. My parents and family stay there. Currently I show it as a let out property with rental income. I am working in Chennai and stays in a rented house for which I claim HRA exemption. Now I have taken second housing loan for home2 in Chennai where construction is in progress and will be completed only in 2017. I have plans to let out the new home2, and continue stay in a rented home.
If I show home1 as Self Occupied, can I claim HRA exemption for rented house at Chennai along with that? After completion of home2, can I show it as a let out property and claim tax exemption?
Dear Narendra,
Yes, you may do so.
Also, show the property which has higher EMI outflow as let-out one.
Hi Sreekanth;
1. I have a flat in City A (through home loan, 8 years old), of which I am the sole owner. I have another flat in City B, (newly purchased, without taking a loan) which my wife and me are joint owners (we have registered jointly). Both of us are IT payees since last few years. I stay in City C in company provided house and my wife stays in City B (due to the nature of our jobs) and pays Society Maint + Property Tax . Flat in City A is presently unoccupied, and I pay Society Maint + Property Tax without fail.
2. Can I show flat in City A as Self Occupied and my wife show flat in City B as Self Occupied? Hence Income from house in both cases would be in negative based on Society Maint + Property Tax being paid. Or do I necessarily have to show Flat in City A or B as rented out.
Dear Vijay,
I believe it can be a better option to show the City A flat as Let-out property kept vacant (rental income as NIL) and show the entire interest payments on home loan as tax deduction.
Read : Income from house property & income tax benefits on home loan.
Flat in City B as SOP.
You can claim HRA too if it is part of your salary structure.
Hi,
I have a home in my name purchased with own income and so not having any home loan, i am living there, hence i am declaring it as SOP and getting HRA on it.
I am planning to take a home loan for another property, what will be the tax and other implications?
thanks and regards
Prashanth M L
Dear Prashanth,
If you have own home and SOP, you can not claim HRA, will be fully taxable.
The other property you can declare it as Let-out and claim the income tax benefits.
Read: Income from house property & tax benefits on home loan.
I live in US and filing taxes in India with Non Resident status. I own an apartment in Bangalore where my parents live. Can this be considered as Self occupied ?
What is the value I enter against “”Annual letable value or rent received or receivable
(higher of the two, if let out for whole of the year, lower of the two if let out for part of the year)” in the schedule House_property for this ?
I also pay monthly maint charges for this apartment to housing society. Are these deductible ?
Dear Gana,
Yes.
If SOP, it is NIL.
Yes, can be deducted.
Read: Income from house property & tax implications..
Thanks for the response. I also went through your other posts and they are all very helpful and informative.
Just to clarify
So monthly maintenance charges of around 1000 Rs can be claimed as expenses in this case and so loss on this house occupied by my parent would be
Income : NIL
Property Tax = 5000 and maint charges : 12000
Total loss : 17000 Rs
Dear Gana,
Yes (assuming you do not have home loan on it).
There is no column to capture this monthly expenses. Just include with property tax ?
Hello sreekant
I have a house in another city A on which here is a house lan but which is neither occupied nor let out.
In city B , I have another house on which I have taken loan which I propose to let out.
I am presently staying in city B, in a company allowed residence due to my better housing facility but due to the same, I donot earn any HRA.
What are the implications of tax and what benifits of deduction can I claim
Regards
Dear N. Rao,
You can declare both the houses as Let-out property
or house with a lower home loan oustanding amount as SOP and another one as Let-out.
If you treat City A property as Let-out then the ‘rental income’ is NIL but you can claim the interest payments as tax benefits (no ceiling limit).
Read: Income from house property & income tax benefits on home loan.
Sir,
I and my son have a property in Pune and another property at Bengaluru. In each property, I owe share of 50% and my son has 50 % share. I stay in Pune in our own property and my son stays at Bengaluru in our own property. In my IT return I can not show both properties as self occupied as there is no such provision in the Schedule of House property to show 2 hoses as self occupied. In such case how I should fill the schedule of house property?
2) In case my son lets out the property of Bengaluru and shifts to a rented house in the same city having higher rent than the rented house then how will be the tax liability?
Thanks and Regards.
Suresh
Dear Suresh,
1 – You have to show one property as SOP and another one as Let-out (at nominal rental value).
2 – He may show the pune property as SOP and the blr property as let-out one in such a case but this again should be based on the quantum of actual tax benefits you would get in two scenarios. Kindly take help of a CA.
Hi,
Please can you advise how should i file my returns for properties as detailed below.
1) Flat#1 (fully owned by me) is not rented out or occupied by myself.
2) Flat#2 (jointly owned with my brother). I was living in it for 5 months before i rented it out to someone for rest of the financial year. I do not pay any rent for it to my brother or share the rental income with my brother.
3) Flat #3 (jointly owned by my brother). Brother is living in it. He is not dependent on me. He does not pay me any sort of rent for it.
Q1) I had moved to a rented apartment in same city where i own Flat #2 and have claimed HRA for the same. Is this permissible as per IT laws?
Q2) Will all of my 3 properties be declared as let-out/deemed let-out?
Q3) Is it necessary that one property must be Self occupied if multiple properties are owned?
Q4) Can i claim loan interest deduction for Flat #1?
Q5) For Flat #2 and #3, home loan is on my name while my brother is simply co-applicant. Can i claim interest deduction for both of these flats?
Q6) If flat#3 is declared as let-out, do i have to mention a notional rent while filing returns for it?
Thanks in advance!
Regards,
Paresh
Dear Paresh,
1 – It is possible and acceptable, provided you can justify your case. (For example: Flat 2 can be very far from your working location and you can take a house on rent).
2 – I believe that Flat 1 is SOP.
3 – I believe that it is not mandatory.
4 – Yes.
5 – Ideally both of your have to claim tax benefits. Are EMIs paid from joint bank account?
6 – Yes.
Thank you Sreekanth for your reply.
Here are my further comments.
2- Why would Flat 1 be SOP? Its not rented out or occupied by me/family.
5- We use our own accounts (not joint) to pay EMI. Does it make any difference?
Thanks again!
Dear Paresh,
Flat 1 – Where is it (in your native)? Is it vacant now? Is it occupied by your parents?
Flat 1 is at my native place but it is vacant and not occupied by anyone.
Flat #1 and #3 are at my native place.
Flat #2 is in city where I’m currently employed.
Should I declare Flat#3 as SOP?
Dear Paresh,
Your situation is very tricky. Suggest you to take help of a CA in this matter.
I am staying in a self-occupied house and I am claiming tax deduction, for the interest I pay towards loan repayment.However, I have also started a house construction, which is not completed and I have taken a second loan for the same.Can I claim tax benefit on the interest of the second house also,which is under construction and is not yet let-out?
Regards
Sudeep
Dear Sudeep..Kindly read this article : Under-construction property & Income tax benefits on home loan.
Thank you, Sreekanth.
sir,
I have some confusion regarding home loan EMI and IT. I am placing it one by one.
1.what is not self occupied property? I have a flat at Kolkata taken by HBL & I’m staying 300km apart from Kolkata for job. The flat at Kolkata is not in rent. can it be treated as self occupied or non self occupied? EMI is going on.
2.As per section 24 of IT interest [max 2L] is deductible from income as payable basis[i.e. accrual basis & not paid basis unlike principal payment]. Loan taken from SBI in floating interest. Now what should I give in 2016-17 IT declaration in section 24 column( as rate of interest may be changed any time in future).
3. If I pay a lump sum money as partial prepayment of loan then payable interest amount[for sec 24] will be changed or remain same as before [if I don’t make any pre payment].
4. In initial EMI bank used to take large portion as interest & less portion as principal. In case of prepayment bank will continue same amount of EMI & loan will tenure decrease. what will be effect on interest part?
can I claim a written report from bank in every year or at the end of loan showing change of amount [if any] in interest.
5. what is more profitable considering bank interest & income tax, prepayment or long term EMI
Pls help me as soon as possible . Thanks.
Dear subhro,
1 – If your home town property is lying vacant, you can treat it as SOP. If you are getting HRA, you can claim it besides income tax benefits on your home loan (ceiling limit applicable).
2 – The total interest paid by you in a Financial Year can be taken from your Loan Statement provided by your lender/banker.
3 – When you pre-pay some amount towards principal, your banker will generally reduce the Loan Term so your EMIs may remain same. However you can ask your bank to keep the term same and pay less EMIs.
4 – This is called as Amortization schedule. Your EMI has two components i) Interest & ii) Principal. During the intitial stages, interest component is higher. As the tenure goes by, Principal component increases thus leading to ZERO LOAN OUTSTANDING. Yes you can get loan statement.
Thanx Sreekanth for guiding me in proper way. Then pls tell me what is non self occupied property? If I buy another property then will it be non self occupied? In IT rules in one place it is saying no deduction for interest in second HBL. Only principal paid is exempted from taxable income(80C) & as per Sec 24: there is no upper limit for HBL interest of Non-SOP. I can’t get the exact meaning.
More over, declaration should be given for next FY i.e. 2016-17. Bank can give statement for FY 2015-16. But interest for the FY 2016-17 can I get?[ because both will not be the same I think]
My last query regarding prepayment or long term EMI continuing, what do you think profitable considering IT aspect as well as bank interest[ at 5th point of previous mail]
Pls help me.
Regards,
SUBHRO
Dear Subhro,
If you own two properties then you have the choice to declare any one property as SOP and the other one as LET-out one (based on which is beneficial to you).
On a let-out property, the entire interest payments can be claimed as tax deduction under section 24.
Kindly read: Income from house property & tax implications.
Pre-payment or continuation, it depends on many factors : Your other financial goals, income level, your savings rate, current & future home loan interest rate scenario etc.,
Nice blog Sreekanth.
I have two house properties. One is rented out and the other one I am staying in. Both have home loans. The one in which I stay has higher interest paid on the home loan. Can I declare the rented out property as self occupied and this one as “deemed to let out” property?
Dear sanjiv ..Yes, it is your choice.
Sir I have a query regarding house property. I am a govt employee and presently staying in another state in a rented house. I have a house back at my native place , which is presently occupied my relatives . Sir in my ITR I have shown that property as Let out and I have also incurred a negative income of rs 140000 from it. My query is should I rectify my ITR and show it as a Self occupied property or it is alright to treat is as as Let out property as I am not occupying it neither I am gaining any profit from it as my relatives are occupying it
Dear vivek,
You may show it as Let-out property. Kindly include ‘rental income’ also while calculating ‘income from house property‘.
Kindly note that you can also claim HRA (if any).
Hi!
I have a unique query.
I have a residential property on which there is a home loan. The Municipal Authority has declared the street on which the property is situated as valid for Commercial use after payment of a Conversion Charge. I run a business (proprietorship) out of the property for past two years. Can i take the interest paid on home loan as expense in my proprietorship business ??
I have various Govt & Excise registrations on the same property.
Thanks & Regards,
Jitender Singh
Dear Jitender..Have you also self-occupied the property? I believe that you can claim it under Section 24 (if it is a Let-out property).
Hello,
I have two house, both in Greater Noida.
House A was purchased in 2006 (through Home Loan), but got possession only in May 2016. Now I am planning to rent it out. Pending home loan outstanding is 8Lakh. Home loan interest for current year is Rs. 80 Thousand
House B was purchased in 2011 (through another home loan) and got possession in the same year. I am living in this home. Pending loan outstanding is 25L. Home loan interest for current year is Rs. 2.5L
For House A, from 2006 to 2016 (considered as construction period) , I paid around 20 Lakh as home loan interest.
So question is:
Can I considered House B as self-occupied property and claim 2L Interest benefit and also
Can I consider House A as Let Out Property and claim Rs. 80 thousand as interest rate benefit and also 20L in 5 instalments in next 5 years.
So total interest claim benefit in a year would be
2L – House B +
80K – House A +
5L – House A (under construction period)
= 7.8L – overall
I will also show the rent as my income from let out property i.e. House A.
Please guide me. Please correct me. Please suggest the best option for me.
Thanks in advance for your support
Regards
Manoj
Please help. I am asking this question for FY 2016-17
Dear Manoj,
Your understanding & analysis is right.
Thanks alot Sreekanth!!
You are a great help.
God bless you.
Hi Sreekanth,
Very informative post. Thank you. It’s also impressive that you are replying in detail to comments as well. Kudos!
I had a quick question.
I have two homes;
1. I am occupying one and have a loan on it.
2. The other one is lying vacant (might sell or rent it out; no idea yet) and I closed the loan on that.
I am confused about the interest deductions and part where it says we can decide which is self occupied.
Can I consider House1 as self occupied and deduct the interest in full against House2 considering a notional rent income on that? or does the law require both houses to have a loan on it?
Thanks Sreekanth!
Dear George,
As the house (2nd) does not have home loan on it and no rental income then it is better to declare house 1 as SOP and claim income tax deductions on home loan.
Had this house had home loan (if higher outstanding amount) then you could consider this as let-out and claim entire interest payments u/s 24.
Dear Sreekanth,
Thanks for the quick reply.
If I have two houses, can I claim the entire interest as a deduction considering a notional rental income or do I need to have home loans on both houses to avail that?
That’s what’s been confusing me.
So basically one house with no loan and another with loan. Can i claim entire interest or am I limited to Rs 2L limit.
Thanks Sreekanth!
George
Dear George,
Without having a home loan on a property, how can one claim tax benefits on interest payments on the said property?
The property which is Self-occupied and have loan then you can claim up to Rs 2 Lakh only u/s 24.
I have one property in Kerala (vacant) and I am living in Mumbai with my parentsin a flat for which I am paying rent and also paying int on loan of 1st property so I want to know that whether 1st prop. is deemed let out or sop?
Dear Rahul..I believe you have to declare it as SOP.
I AM A RETIRED PERSON RECEIVING PENSION AND LIVING IN MY OWN HOUSE WHETHER I MAY GET ANY RELIEF FOR HOUSE RENT
Dear THAKURDAS..If you are not paying any rent then no relief as such is available.
Kindly read: List of Income Tax Deductions for FY 2016-17.
Hi Sreekanth,
If an employee leaves the organisation in June and provides the investment proof of 2 lacs towards Loss on house property-Self Occupied. Should the company consider the entire 2 lacs for tax exempt for they should consider only 3 months (Apr, May & June)
Thanks..
Dear Aamer,
Ideally they may consider for entire FY and accordingly can calculate your tax liability.
However, when you the employee joins a new company, he/she has to update about this to the new employer too.
Read: Income Tax Declaration & Investment Proofs..
Hi Sreekanth,
Can you please help me with my questions?
Thanks..
Dear Aamer..Kindly note that I have already replied to your query dated 13-May-2016.
I(individual, no co-applicant) have a house in my name without any home loan. Now me and my wife are planning to invest by buying a second home with help of home loan. So i guess in this case it will be treated as second home for me and first home for my wife.
1. So i and wife will be able to claim 50% of interest for tax exemption under 8oEE.
2. Wife would be able to claim 50% of principal under 80c.
Is my understanding right?
Dear Jon,
1 – 80EE and also under section 24.
Read:
Income from house property & Income tax benefits.
List of Income tax deductions for FY 2016-17.
2 – Yes.
Hi,
I am Manoj from Mumbai. I am staying with my parents and paying rent to them. Can i claim HRA on this?
But i am the first holder and my father is second holder in this house. I have also completed home loan on this.
Please advice.
Dear Manoj,
I believe that you may not be eligible to claim HRA as you are the co-owner of the property and it is self-occupied.
Hi, I have a property in BLR which is rented out and no loan for this property. I have been shwoing rental income and paying tax for the same. I have booked another propoerty in Gurgaon where I live in 2012 and I got possession letter last nov 2015. I have not rented it out as the wood work is going on. I am staying in Gurgaon in rented house. I have to calim the interest paid for the last 3 years in 5 equal installment and the interest for 2016-17. Can I claim the entire interest as the house is neither rented nor self occupied at present. Also if I occupy, is there any limit for claiming the interest from 2012-2015
Dear Rajan,
When was the loan disbursed?
Kindly read:
Under-construction property & Tax implications.
Income from house property & home loan tax benefits.
HI,
I was buy a home APR-2015 and take a home loan with my own name (only my name in agreement and home loan) and Home loan only my self, After some month I am married JAN-2016 (my wife is working ) Now i want add my wife name bank loan(50%) so i can take benefit in Tax like under Principle(80c- 3lakh, ) and Interest(24-B- 4 lakh) … what can i do for this scenario.. because ultimately after a marriage wife will be 50% ownership either name is there or not in agreement. Please reply
Reply
Dear Rishi,
You can make a Gift deed (mentioning the ownership share in your spouse’s name) & then can ask your banker to add her as a co-borrower of your home loan.
Read: Options for adding Spouse’s name as co-owner of the Property.
The stamp duty is generally 2% of the value of the property, along with 1% registration charge.
i have already pay those thing why i will pay again
Hi,
I have a house in delhi, and l(Joint loan) loan on the house will be completed. It is shown as SOP , my parents in delhi use it and I use it whenever I visit delhi.
I am planning to buy second house in Bangalore and take up loan on the house. Working in Bangalore currently.
question:-
> As I have only one house on home loan now, Can I show Bangalore house as Let out even when working in Bangalore and delhi house as SOP as used by parents?
> Do I have to pay wealth tax on second house in Bangalore or wealth tax on first house in Delhi ? IS this one time or every year? What is tax? Any other tax implications?
> In case of let out, interest benefit on the total amount can be claimed by both partners or 50% each?
> in case of let out, I have to show other income from property (rent)? Minimum rent amount can be shown and tax let out interest tax benefit?
Dear mukul,
1 – When a person owns two SOP properties, he/she has a choice to show one as Let-out. You can show Delhi house as SOP (parents residing) and the Blr property as Let-out. But are you going to claim HRA?
2 – Wealth Tax has been abolished from 1st April,2015.
3 – If the other co-borrower is also a co-owner of the property then YES. Read: Joint home-loan & Tax implications.
4 – Read : Income from house property & Home loan tax benefits.
I do not plan to claim HRA. Only want to show delhi house as sop and Bangalore as let out for interest purpose.
Showing let out, I have to show other income source from house?
Also, I have to I indicate staying in rent house and claim hra?
Dear mukul,
As per tax law, you can follow the points as discussed in our previous comment.
But practically, your employer might ask your about ‘residential address’ etc., So, you may have to manage that.
Hi,
Hope you’re doing well.
My name his Mohammed Faheem from Hyderabad and my HRA is 3705 P.M Total 44,460 P.A. I stay along with parents in one house which belongs to my father and that to not register on him. It’s on the name of my grandfather. Is there any possibilities to claim HRA exemption as per IT rules? Can we show rent paid to parents/spouse. If that is so what I have to do. How to claim that please advise.
Thanks in advance.
Regards,
Mohammad Faheem
Dear Mohammed,
Yes, you can pay rent to your parents and get the rent receipt from them. Also, your father has to show this in his ITR (if a tax assessee) as rental income.
I have taken company home loan where interest is lower then the market rate. Whether Interest subsidy received on it is a taxable perquisite
Dear Diwakar..I believe that you can claim the tax deductions u/s 80c and u/s 24 as well.
Hi Sreekanth,
I am currently living in Bangalore and have purchased a property here for which I am paying pre-EMI (actual emis have not started and construction is still going on). I have purchased a property in my home town (not Bangalore) for which my brother is the joint owner and co-borrower of loan and for this property I am paying EMIs and my parents are living in this property.
What kind of tax deductions I can expect?
Dear Gaurav,
Kindly go through all these articles & revert to me if you still need clarification;
Income from house property & tax implications.
Joint home loan & tax implications.
Under construction property & home loan tax benefits.
Thanks Sreekanth, these are really good blogs. One question I still have that considering my home in my home town as second home, I can claim tax deduction on the interest paid. The question is can I say that my rental income in nil (as my parent are staying there). Will give you detailed data:
– Total Interest paid in financial year 15-16 is Rs 130000
– As I am co-owner of 50% part, my interest portion will be Rs 65000
– Rental income – nil
Can I claim tax deduction on entire 65000 under section 24(b) or should I still need to show some rental income and reduce that amount from 65000 ?
Dear Gaurav,
As the blr property is still under construction, you can consider the hometown property as SOP (as your parents are living there).
Hi,
I own a joint property with my parents but live in other city due to my job requirements in rented property, my parents live in the owned property. I have 2 questions to this subject;
1) I see that you write that we can claim exemption on HRA if living on a rented property. (upto what value ?)
2) Can I claim the Property Tax paid to the Municipality for my owned property under Income Tax rebate as this is also a tax that I am paying to the government ?
Thanks, Deven
Dear Deven,
1 – Click here to know about HRA calculation & exemption limit.
2 – Yes, you can deduct this from the ‘income from house property’. Read: Understanding Tax Implications of Income from House / Property
Please refer our earlier conversation
Thank You very much Sir.
1. Cant I file return for the AY 2015-16 now and claim remaining portion of 1 Lakh under 80 EE.?????
2.As you said for Vacant flat or self occupied, the max rebate that I can is for 2 Lakhs of interest paid, under section 24.
What if I let out my property….I can get unlimited rebate for the interest paid under section 24????
I mean I dont understand the logic behind it , because on the one hand I am getting extra benefit fo letting out my property and on the other hand I will have rental income also.
Why these extra benefits for let out properties as compared to SOP????? Just for curiosity.
Regards
Vikas
Dear Vikas..Suggest you to kindly consult a CA in this matter.
Hello Sir,
Kindly clarify me the issue. I was working at Delhi and having flat. During Aug 2015, I have been transferred to Hyderabad. Now my Delhi flat is vacant. In Oct 2015, I purchased another flat at Hyderabad, in which I shifted in Feb 2016. From Aug 15 to Feb 16 I was staying in rented accommodation at Hyderabad.
1. Whether I can show Delhi property, which is vacant, as Self Occupied and Hyderabad Property, which is having low rental value, as deemed let out.
2. Whether I can claim HRA rebate for the period Aug 2015 to Feb 2016, the period during which I was staying in rented accommodation at Hyderabad.
Dear Seshasai,
1 – Yes. If a person has 2 houses, he can choose to indicate one house as self occupied and the other as ‘deemed let-out’.
2 – Yes you can claim HRA for the said period.
Hello Sir, Please help me with this.
We live in a house owned by my mother and father in joint ownership since 1999. Recently we took a loan for house renovation work. the cap for deduction u/s 24b for renovation is limited to 30000 and not 200000, right?
for the purpose of renovation we are currently living in a rented house in the same colony. My dad being a salaried employee gets HRA.
Can we claim both exemption in HRA u/s 10(13A) and interest deduction u/s 24b? and the house in which renovation is being done would be treated as self occupied?
Dear Ayush,
I believe that your father can claim both (HRA & 24b deduction).
Would the house in which work is being done would be considered self occupied or deemed let out?
Dear Ayush..You can consider it as Self occupied property kept vacant.
Dear Sir
I own a flat for which possession letter was given in the month of MAY-2015. I took Home loan of Rs. 25 Lakh(first time buyer) in the month of SEP 2013.
Home loan interest & principle for different FY is as follows:
FY-2013-14- INT- Rs. 78, 215 & PRIN- 46,320
FY 2014-15- INT- Rs. 1,95,785 & PRIN- 1,03,099
FY 2015-16- INT- 2,23,459 & PRIN- 70,181
TAX benefit claimed till date
FY 2013-14- NIL ( as not possessed)
FY 2014-15-claim Rs. 74000 under 80 EE (1 Lakh Extra tax benefit on interest which could claimed in two years).
I claimed this as total interest till date was 2,74000. I didnt claim 200000 under section 24 as possession was not given but over that which 74000 I claimed since this was extra benefit available only for two years and there was no necessity of possession for applying this.
FY 2015- 16 – I need to apply.
Question:
1. whether what I did for FY 2014-15 was correct or not.
2. As my flat was vacant throughout the year FY 2015-16, whether tax limit would be 2 Lakh or unlimited
3. If it is limited to 2 Lakh , How would I claim interests paid in previous years(in my case 2 lakhs is left), as this year’s is already more than 2 Lakhs i.e. 2,23,459.
Kindly help
Regards
Vikas Kumar Jha
Dear Vikas,
2014- 15 : I believe that Section 80EE, deduction on the Home Loan Interest paid by you is valid for financial years 2013-14 & 2014-15 (Assessment year 2014-15 and 2015-16) only. Also why is that you have claimed only Rs 74k?
2015-16:
1 – Yes. Refer above point too.
2 – You mean to say that you kept your property vacant from May 2015 till date? If the property was not let-out for any part of the year, you have to declare it as ‘Self occupied property kept vacant’. (What is the reason for keeping it vacant?)
3 – If you declare it as SOP, the extra interest amounts have to be forgone.
Dear Sir
Thanks for your prompt reply
80EE: What I understood from the budget presented By Shri P Chindambaram for the year 2013- 14, was that 80 EE (1 Lakh) is the extra amount which can be claimed only if interest exceeds 1.5 Lakh(at that time interest limit was 1.5 Lakh) and the amount would be over and above 1.5 Lakh.
Foe example if interest is 2 Lakh I could claim 50K under 80 EE and if interstis say 50 K I cant claim any amount under 80 EE. This is what I understood.
Now for FY 2013-14- interest was 78214 < 1.5 Lakh , so I didnt claim anything under 80 EE. Also, since i dint get the possession I dint claim interest also under section 24.
For FY 2014-15 my interest was 1,95,785 and adding previous year interest it became 2,74,000. Since I didnt get possession at that also, I didnt claim
2 Lakh under section 24(Limit was exceeded to 2 Lakh in newly announced budget). But the extra amount 74K over & above 2 Lakh I claimed under 80 EE, as there was no restriction of possession for claiming under 80 EE.
Whether what i did was right????
Should I have been claimed for 1 Lakh(max extra amount) or 2 Lkha( for two years)
If such thing I should have done, then please advice , cant I file return for those year now.
2. I got possession in MAY -2015 and from that time it is vacant, as I am working in some other place.
Total accumulated interest upto FY 2014-15 is 2 Lakh which I didnt claimed last year
and this year interest is 2,23,459.
Please How much interest I can claim for tax rebate.
Regards
Dear Vikas,
Section 80EE is applicable for Self-occupied properties only, which a portion of the deduction have already been claimed. I believe that you could have claimed Rs 1 Lakh u/s 80ee.
Assessee can take deduction u/s 80EE on interest payable on home loan upto 1 Lakh in A.Y.2014-15. It can claim deduction in two assessments year. Means if whole amount of interest payable upto 1 lakh is not claim as deduction in A.Y.2014-15 then remaining balance amount upto 1 lakh can claim in A.Y.2015-16.Total deduction under this section shall not be more than 1 lakh.
So, in this AY 2016-17, the maximum limit you can claim is Rs 2 L u/s 24.
Thank You very much Sir.
1. Cant I file return for the AY 2015-16 now and claim remaining portion of 1 Lakh under 80 EE.?????
2.As you said for Vacant flat or self occupied, the max rebate that I can is for 2 Lakhs of interest paid, under section 24.
What if I let out my property….I can get unlimited rebate for the interest paid under section 24????
I mean I dont understand the logic behind it , because on the one hand I am getting extra benefit fo letting out my property and on the other hand I will have rental income also.
Why these extra benefits for let out properties as compared to SOP????? Just for curiosity.
Regards
Vikas
Thank You very much
Sir,
1. Cant I file return now for the AY 2015-16 for the remaining portion of the 1 Lakh under section 80EE.
2. As you said max limit for tax rebate for self occupied or vacant flat is 2 Lakh.
What if I let let out my flat, I will get unlimited rebate for interest paid under section 24. I mean I dont understand the logic behind this, On the hand I will get extra tax benefit by letting out the property, and on the other hand I will also get rental income.
Just for curiosity may I know , why such extra benefits to person who let out his property, and no extra benefit for that person who cant live in his own house as he is working in some other place and due to some reason could not give his house on rent.
Regards
Vikas Kumar Jha
Hi, I have stayed in my rental house till 31-Aug-15 and then moved to my own flat on 01-Sep-15. From 01-Apr-15 to 30-Apr-15 I had rented out the flat.
So I claimed HRA benefit from Apr 15 to Aug 15 and also Housing loan Principal + Interest on loan under Self occupied property and under Letout, I declared 1 month rent as income and then muncipal tax paid + 30% of rent collected as maintenance charge.
However during verification from Hewitt, they approved HRA portion + Princpal paid under Self occupied + Muncipal tax + maintenance under Let out however they did not approve interest pais (~2.5 lakhs) under Self occupied. So I will be loosing the tax amount on interest paid now. I have not declared Principal + Interest this under Let out section.
So please advise how I can account this interest paid for tax excemption now.
Regards
Rajesh
Dear Rajesh..Is one portion of your house being self-occupied partly & other portion let-out ?
Dear Srikanth,
I own a house in Bangalore, which is a joint property with my wife. I am planning to buy 02 more flats in Delhi towards investment purposes. I had loan on my first flat in Bangalore which is over and I would be taking loan on other two properties now. My query is, whether I will be able to take tax benefit on one of the property in delhi as SOP, taking tax exemption for principle and interest paid (upto 2L) and not showing any rental income and other property as rent out in delhi by showing rental income and taking tax benefit towards interest paid. Please advice.
Dear Jatin,
As per the taxation laws, if you have multiple properties, you have the option to chose any one as Self-Occupied property and the remaining properties can be declared as Let-out or Deemed to be let-out properties.
Thanks for your prompt response Sreekanth, I really appreciate your help towards answering the queries here.
I would like to be more clear here, whether I can consider my one property in Delhi as SOP and second property in Delhi as Let out, whereas I own a property in Bangalore and not claiming any exemption under HRA or self property benefits on Bangalore property. Only 02 benefits both on Delhi properties (SOP & Let out benefits). I will be staying in my Bangalore property.
Regards..
Dear Jatin,
Also, your Bangalore property has to be declared as ‘let out’ or ‘deemed to be let-out one’ and calculate your ‘income from house property’ accordingly.
Kindly read: ‘Income from house property & tax implications’.
In this situation, i think the better option would be to keep my Bangalore home as SOP and claim IT benefits on other 02 properties as Let out properties. Can I claim interest paid towards both loans in total?
Dear Jatin..Yes, its a good option.
Hi Sir,
I m planning to shift in the rented house nearby my son’s school in bangalore and I will put my own on rent, which is quite distant from my son’s school. I have closed the home loan of my flat. I will be getting 16000 as rent and will be paying 23000 as rent. Guide me how it will work out considering income tax in mind.
Regards,
Rajni
Dear Rajni,
You can claim HRA (if any) and also have to show your rental income while calculating ‘income from your property’.
Read : House property & Income tax implications.
Thanks Sreekanth for the prompt reply.
I went through the link and found its very useful. But still I have few doubts, which I request you to help me to understand.
Yearly rent for my let out property-30% of deduction is 134400(16000/pm-30%), whereas I will be paying 276000 (@23000/pm). My Basic salary is 360000, so 50% of the basic
salary I arrived at 180000. So considering the overall scenario I will be paying 45600 more (180000-134400).
Will I get this benefit under HRA for paying this extra money in the rent.
Also want to know is there any way where I can gift my rent directly to my wife or can I make any agreement with my wife and tenant .
Please share your guidance and help me!
Dear Rajni,
You need to calculate the tax exempted HRA separately. Click here to calculate..
The arrived amount is tax exempted and can be deducted from your Gross salary.
The calculation of your income from house property is a different one (as calculated by you).
(if the house you bought and the house you live in are in the same city, you should have a genuine reason for not living in the house that you own. You may need to provide the necessary explanations to your employer, or the income tax authority in case there is a scrutiny of the details that you have provided.)
Thanks Sreekanth for the detail reply.
Also want to know is there any way where I can gift my rent amount directly to my wife or can I make any rental agreement between my wife and tenant . I am the sole owner of the house. My wife is holding the PAN card and not working. So can we save tax this way?
Please advise.
Rajni
Dear Rajni,
As the property is solely owned by you, the rental income should be shown by you only in your ITR.
If a person decides to gift a certain amount to his spouse, or minor children then any income earned by the recipient on it shall be clubbed with the income of donor (you).
Read : Gifts & Tax implications.
You may add her name in the sale deed by making a Gift deed and mention a certain percentage of the property in her name (ownership ratios). The rental income can then be claimed as per the ownership ratio.
Read:
Options to include spouse’s name as co-owner of the property.
Thanks a lot Sreekanth for clearing all the doubts.
Thanks for the great article, very informative!!
I have a question about investing money in my parents name. Please help to clarify following questions;
1.) If I invest money in my parents name, my parents will be liable to pay tax on the income that gets generated. I would not need to pay any tax, right
2.) My parents can anytime give that money back to me and it would not attract any tax , right.
3.) I invest 30000 per month in my fathers name and same amount in my mothers name. I am currently doing this in cash. I have created a gift deed on a plain paper indicating the amount provided to parents in a financial year. My atm transactions also show the required cash withdrawl. Do you think its fine approach.
Please share your suggestions.
Dear rohit,
1 – Yes.
2 – Yes. (A gift is generally not returned. So you can consider this amount as a different one. Else it can be viewed as return of borrowed money ie loan).
3 – Legally (from taxation view point), it is fine. Kindly note that your parents may have to file ITRs (if required).
Thanks sreekanth for the answers
You make comlpex things sound so simple
2.) For #2, what is your suggestion on handling this. Cannot a father simply give his money to his son or what is the correct wording or mechanism to show here.
3.) My father does file ITR but my mother has no source of income but only the interest income generated from the investing the gift money. So my mother has very low income levels and hence she doesnt file an ITR. This is fine, right!!
Thanks !!
Is it possible that I can take your financial services as well (advise on phone etc.)
Dear Rohit,
2 – Can of different amounts. Let him also maintain a record of these transactions.
I have recently stopped providing one-to-one Financial planning services. You may kindly leave your queries here (blog), will surely try to answer them ASAP.
Thanks Sreekanth.. Really appreciate your help!!
2.) on #2, My father has a RD in bank with the cash that I transfer to him. Now when these RDs mature, this matured amount is used to pay my home loans. So this should be fine, correct..
Dear Rohit..Looks ok to me. But if your banker asks for the source of income while repaying or part-repayment of your home-loan, you may have to produce the Gift Deeds. Kindly check about this with a CA too 🙂
Hi
I own two flats. My wife is joint owner for these flats. I have not claimed any deduction under home loan for these properties. Now, I have got the possession of these properties and want to rent them out
1.) Is it possible that only I show the complete income from these 2 properties (and my wife shows no income from them) i.e. rent generated out of these 2 properties . Both of us are in 30% bracket.
2.) I am living on rent in the same city and claiming HRA benefit. The reason for staying on rent is that the property rented by us is very close to my wife’s office.
Please share your guidance and help me!
Regards
Abhishek
To add, I have closed my home loans and never claimed any home load benefit for these properties
Dear Abhishek,
1 – Ideally, the rental income should be shown as per the share of ownership.
2 – How about the proximity of the owned properties to your/wife’s work location?
Hi Sreekanth
Thanks!
1.) The one we are living (rented one) is 2 kms. The property that we own are 12kms and 23 kms far from my wife’s office.
2.) Also, please guide me on another thing. If the cost of property is more than 30 lakhs, we need to show it in our income tax return, right. I purchased property in say 2011 but I paid the amount in instalments as the property was under construction. I have got the possession of property this year however the registry is still pending. What is the ideal time to show that I have bought a property over 30 lakhs
(a.) when I make first instalment for that under construction property (assume instalment is much around 10-15 lakhs for 1st year)
(b.) when i get the possession of property
(c.) when the property gets registered
In my case, I have not reported when I bought it. But I have got the possession now and registry is pending. So should I go with (b) or (c) or some other option.
If the property is in joint name, do both of us need to show the purchase of property in out returns.
Regards
Dear Abhishek,
2 – It is not mandatory to inform the IT dept about the ‘high value transaction’ separately in the ITR, as most of these transactions are reported (if your property value gets registered for > Rs 30 Lakhs, then quoting PAN is mandatory and also these kind of transactions will be informed by the offices of Registrars to the IT dept).
When the property gets registered, in that particular FY/AY year.
Kindly read:
How Income Tax Department tracks the High Value Financial Transactions?
List of Financial transactions where quoting of PAN is mandatory
Hi Sreekanth,
I have taken a loan on property1 and used to live there. I have claimed tax exemption as self occupied in previous years. Now the house loan is completed and also I have let it out. I have purchased another property2 and took a loan on it and am staying now in it. How is the tax treatment for these? Can I show property2 as letout and claim the full interest on property2 after deducting rent from prop1 ? or I need to show property2 as sop and limit tax to 2 lakh and show rent from prop1 as profit?
Thanks
Bhanu Prakash
Dear Bhanu,
As you have let-out property1, your tenants might be claiming the HRA. So, ideally you show it as Let-out one.
As you are residing in Property2, it is better you show it as SOP and claim income tax benefits accordingly.
Hello Sir,
I have purchased a Flat 9 months back and i am paying EMI to the bank. Am i eligible to claim Interest Paid during this period. Builder promised to handover the flat only on May 2016, hence i am staying in Rented house. Shall i submit HRA and Interest Paid as well ?
thanks
Hemanth
Dear Hemanth..Kindly read : “Under construction Property & Income Tax implications on home loan“.
Thanks Srikanth.
Your explanation is very much clear. Good work.
Hi Sreekanth,
I am a Central govt PSU employee and stay in my company owned quarters.For that matter company neither pays me HRA nor I won’t receive any HRA exemption. I have no issues with it.
But my husband being a software engineer, he is also not claiming for any HRA exemption thinking that he is not supposed to that as we stay in Govt quarters.
My question is whether he can claim for HRA exemption or not, if so in what way and any proofs need to be submiited for that.
Dear Prema,
As he is not paying any rent, HRA exemption can not be claimed.
If he pays me the rent,can he claim?
Hi Srikanth,
My parents are staying in a house in my Village (Kerala) ,that housing loan is paid by me(on my name).I am not getting any rent from this House.
And I had purchased A flat in Bengaluru,that loan also paid by me only.I am working in Bengaluru and staying with my family (Wife and child).
SO please help me how can I save the Income tax??
Dear Satheesh..If you have self-occupied Blr property, you can treat is SOP and claim interest payments of up to Rs 2 Lakh u/s 24.
You can treat the property in Kerala as let-out one and claim interest payments (no limit) u/s 24 b.
Read : Income from house property & Income tax implications.
Hi Sreekanth
My case is “Self Occupied Property – A portion of it is Self-occupied & another portion is Let-out”. But the problem here is that mine is a flat. I’ve rented 1 BHK to someone else & reside in the other portion, which is 3 BHK.
How do I divide the housing loan interest between the let out property & self-occupied property in that case ??
Pls. guide
I understand from some other thread that if any portion of the self occupied property is let out, full home loan interest exemption can be claimed, without upper ceiling of Rs 2 Lakhs. But as per your article, that’s not the case and I need to divide between the two shares ??
Dear Nikhil..2 kitchens provided in a Flat 🙂 ?
If portion of property is SOP & another portion is let-out, you can treat it as if it is two units for the purpose of computation of Income from House Property.
Rental income, property taxes and interest payments can be APPORTIONED between the let out portion and self-occupied portion on built-up floor area.
(income from first floor which is let out shall be computed separately as per let out provisions and the floor which is self-occupied shall be computed separately as per self-occupied provisions. Municipal tax and interest shall also be apportioned on the basis of built-up/floor area.)
Sir, I take a flat in hooghly west Bengal & it is vacant. My father is not well I stay with him in same city & pay house rent to him.
I submitted to my office it file 1) Home loan interest benefit 2) Principal home loan benefit 3) HRA benefit (to submitting house rent sleep signed by my father with his PAN card number ) He is 65. My working place is 100 km from my residence.
Is it ok? or I can face any tax law problem. My father income is yearly Rs.40000
Waiting your valuable reply soon.
Dear SOUMEN..Based on the above info, you can claim both tax benefits & HRA.
Sir
I have recently bought a flat in me and my wife name under joint ownership and 100 % loan amount is paid by me as my wife is a housewife .This property is rented out and 100 % income from house is received by my wife on her account. A rent agreement has also been executed in her name. She is not employed and is not filing any return.
Can I can claim interest upto 2 lakh under my name by showing negative income from property as all the rent is been taken by my wife and i am not having any income from the house but i am paying the loan interest .
Also i would like to mention that i am living in a company lease house and this house is the first house under my name.
Dear diwakar,
The rental income should be shown in ITRs as per the ownership ratio.
If EMIs are getting deducted from your individual account and if the loan statement is issued in your name alone, you alone can claim tax benefits on home loan.
Sir,
I have two houses
1.in rohini delhi which is vacant
2.other house is in palam vihar gurgaon.this house is let out.
Iam staying on rent in Dwrka delhi
My query is can I avail rebate on hba interest for two houses and hra rebate for accomaodation staying on rent in dwarka regards
Dear upadhyay,
I am not aware of the localities and the distance between them (from your work location to your properties).
Ideally you can declare any one of your property as let-out and the other one as SOP based based on which is beneficial to you.
But if your work location is very far from your properties location then you can claim HRA & tax benefits too, but you need to justify your decision (if required).
Kindly read : ‘Income from house property & Tax implications’.
thanks for information sir
Dear Sir
I have three owned flats, two of which are located in Hyderabad and another is in Mumbai. For all three flats, I took the housing loan from bank. Currently; I stay in a rented accommodation in Hyderabad. The reason being Hyderabad flats are intended for investment and currently not let out. Under my investment declaration, I have considered my Mumbai flat as self-occupied. My parents stay there. Other two flats in Hyderabad have been treated as ‘deemed to be rented’.
Accordingly, I have claimed the following deductions:-
1) Loss on deemed to be let out properties in Hyderabad (Section 23)
2) Interest on borrowed capital for self-occupied property at Mumbai (Section 24)
3) Principal repayment for self-occupied property in Mumbai (Section 80C)
However; my company payroll team removed interest on borrowed capital (SELF-OCCUPIED PROPERTY IN MUMBAI) from my declaration without specifying any reason. Moreover; the principal repayment for deemed to be let out properties was summed up and considered under section 80C; instead of principal repayment for SELF-OCCUPIED PROPERTY IN MUMBAI.
According to my knowledge, interest on borrowed capital and principal repayment (FOR SELF-OCCUPIED PROPERTY IN MUMBAI ONLY) shall be considered irrespective of loss on deemed to be let out properties in Hyderabad.
Please confirm if my understanding is right and I can get back to my payroll team for this error.
Regards
Nilesh
Dear Nilesh,
1 – They have to give you the reason. I believe that you can claim tax benefits on interest payments of Mumbai property (SOP).
2 – Principal repayments to the extent of Rs 1.5 Lakh is only considered. So, probably they would have considered accordingly.
Hi Sir,
I am planning to construct house ( with 18 lakhs) for SOP as Co-owner with my brother. So how much I am eligible for tax benefits and how to calculate the same.
Please advise for the below mail id.
Dear Raghu,
Kindly read below articles:
Joint home loan & IT benefits.
Income from house property & Tax implications.
Hi Sreekanth,
I have bought a flat in NOIDA and shall get the possession of the flat by Mar16, this is my 1st property(SOP). My office location is in DELHI around 35km from my flat location. As I live nearby my office and don’t want to shift to my flat in NOIDA
1) Can I claim both tax rebate on home loan interest as well as HRA exemption for rent paid in DELHI ?
2) If 1) above is YES, then how the rental income will be shown for tax calculations for NOIDA flat, if
a) it is actually rented out to someone
b) it is vacant
c) my parents reside
Dear Rakesh,
1 – Yes (but you may have to justify your case if required).
2 – Let me know your plan. Are you going to let out the property?
Sreekanth,
1) Justify to income tax dept ?, (if my case falls in scrutiny) or with some documents at the time of ITR filing?
Is justification of different city/ locations of office and flat(SOP) not applicable in my case??
2) Yes, my plan is to let out the flat, but if i don’t get suitable tenant, it may be possible that it will be vacant through out the year.
please suggest..
Dear Rakesh,
1 – Only at the time of scrutiny (if any). Yes, as you live in diff cities you can easily justify your case. ‘Distance’ is the key point here.
2 – If you treat it as LET-OUT one
a) Read : Income from property & Tax implications.
b) Vacant : No rental value is shown when calculating ‘income from property’. You can claim total interest payments u/s 24.
c) If your parents reside, you may treat is as SOP or Let-out one (if they pay you rent).
Hi Sreekanth,
I got little confused here.
As this is my first house property, I thought it will be treated as SOP only irrespective of whether I actually stay or not. But as per your reply, If i rent it out it will be treated as LOP/DLOP, If it is treated as LOP/ DLOP then am I eligible to claim home loan interest rebate without the limit of 2 lac (as the case for LOP/ DLOP) ???
regards
rakesh
Dear Rakesh..If you rent it out, it is treated as LOP. Yes, you can claim full interest payments as tax deductions.
Thanks Sreekanth,
Is PPI adjustment also applicable for LOP(1st property), as I have paid home loan interest of more than 2 lacs for this as well as last 3 FYs…???
Hi Sreekanth, I m still waiting for ur kind reply on the above comment…. thanks
Dear Rakesh..Yes it is applicable..
Hi Sreekanth,
I have 2 properties. 1 in same city where we are staying which is SOP and 1 at my home town.
SOP has home loan which is currently going on.
My family stays at my home town property and doesn’t have any loan on it. No income from this property. Do I need to show some income even though there is no such a income from this property.
How can I avail tax benefits for SOP?
Dear Vrushali,
If your home town property is occupied by your parents, then no need to show any ‘rental income’.
You can claim tax benefits on your home loan property as given in the article.
Thanks Sreekanth for quick reply.
It means I can show principle(under 80C) as well as interest up to 2lacs under self occupied property.Is this correct ?
Yes dear Vrushali.
Read : Home loan & Tax benefits.
Thank you so much Sreekanth. I read a lot on different site but now it’s clear after reading on ur site and getting help so quickly. Really appreciated. Thanks!
Thank you dear Vrushali. Kindly share the articles with your friends and keep visiting 🙂
Hi SreeKanth.
I have a question. I am living in a self occupied home (for which i had taken Home loan) and my wife (due to her studies) is living in some other city (with her parents) can i pay rent on behalf of my wife and claim HRA exemptions. In my case i am paying home loan as well as rent. Please let me know what all i can claim as exemptions.
Thanks
Dear Amardeep..I believe that this is not acceptable.
Hi i have a tricky situation.
I Own 2 houses.
1. one in my home town (Can i consider it as self occupied)
2. One in the city i am working (Let out)
For both above house 1 took separate home loan.
I am staying in a rented house.
Questions.
1. The house which is in my home town can i consider the interest in (24 a till 2000000) and principal in 80c ?
2. The house that is in my job city is let out, can i claim intrest after deducting income of rent and tax it goes to 336000 as part of 24 (b) ?
3. since i am staying in rented house by paying less that 100000 per annuam, can i claim this as well ?
all above 3 options at a time is possible or not?
Dear Sandeep,
1 – Yes, but if required you may have to justify your decision. For ex: Your parents can occupy it and can be treated as SOP.
2 – The property in your work location has to be ideally treated as SOP right? Is there any reason for you staying in a rented accommodation? (Is distance the reason?)
Hi Sreekanth,
My apartment is 20 km from my work place and this is one of the reasons I live on rent closer to work. I would like to claim interest for my home loan under section 24 and also HRA. Do you think section 23(2) (a) and (b) will apply and I will not have to apply notional rent as my apartment is not let out this financial year please?
Thanks much!
Dear Sam,
If you can prove (if required) that your work location is far from your home, you can claim both HRA & home loan tax benefits.
Is it going to be vacant for the entire FY 2015-16?
If yes, annual rental value (section 23) is NIL in this case.
Hi,
I bought a small flat in my name in 2005 and later i willed 2/3rd of it to my mom and sister who were dependents without any income. They now stay in that house. That was loaned thorough HDFC and that loan is completed. I continue to show that as self-occupied house without any interest claim or rental income. My husband and I bought an apartment couple of years as joint owners and we live there. For my tax purpose, this is deemed let-out house. So, i calculate loss on HP by assuming 50% of FMV and 50% of interest of the current loan. For my husband, this is first HP. Can he assume this as self-occupied and show interest (with cap) without any FMV or HP loss calculations?
Dear Prathipa,
As you are treating it as Let-out property, your spouse also has to treat it as let-out one only.
In case if your husband wants to treat it as SOP then you also have to declare it as SOP .
I am staying in my own house. I do not have any loan on my house right now.
I am getting HRA from my job.I am paying tax on my total HRA so far.
Will I get any exemption for repairs in my own house.
Dear KSRao..If you do not have any homeloan, no tax benefits can be claimed.
maybe the dumbest question, but I want to be sure, the 1.5 lakh and 2 lakh limits are per month or per annum?
Dear GG..Wish they were per month..Then for most of the tax assessees who have home loans, the tax liability could be NIL 🙂
They are per annum limits.
Hi
Me and my wife bought a flat as co-owners in same city we work. We got possession in May 2015. From then on its left vacant.
What i am not able to understand is: do i need to show my house as let-out with some municipal decided rental value as income from property and can claim for full home loan interest under 24(b).
Secondly can i add my pre-emi interest paid before possession to it?
Dear Varun,
Are you going to declare it as a self-occupied property or let-out one?
If let-out, you can do so.
Regarding Prior period interest, kindly read: Under construction property & Income Tax implications.
Yes, thinking of declaring as Let-Out.
Is it like only rented-out ones can claim full interest exemption and not the vacant, but declared as Let-Out with fair market value shown as “Income from house property”.
Dear Varun,
If you are declaring it as let-out & keeping it as vacant, you can still claim ‘full interest amount’ as tax exemption.
Hi,
I am a salaried person from Kolkata. I own a flat jointly with my mother in Kol but staying with my parents at their place which is 2 KM away from my flat. The flat s currently a vaccant property for which I have a home loan and want to avail tax deduction for the same. Can you please advice if I need to show income from my flat in IT return, if yes what should be the minimum amount.
Thanks.
Dear Bagchi..You can show it as a self-occupied property. There is no rental income on SOP. You can claim tax benefits of up to Rs 2 Lakh on interest paid & Rs 1.5 Lakh on principal repayment.
Kindly read : Understanding Tax Implications of Income from House / Property
Hi,
I had a query on the rental house, If am staying in a rental house in another city (due to employment) and my family is staying in hometown on a Rental House again, Can I avail tax benefit by claiming rent paid in both houses? Please advise.
Dear Gautham,
I believe that you can claim HRA only for one house (city of employment).
Hi,
We took a home loan of Rs.30,00,000 (myself and my husband are the primary and secondary owners) last year and were paying pre-EMI. Now, registration is completed and the flat possession is in this month.
Could you let us know what amount to enter in below fields?
1. Interest on Housing Loan-Self Occupied Property (Sec 24(b))
2. Housing Loan Principal Repayment
Thanks,
Priya
Dear Priya,
Kindly read my article – ‘Under construction property & Tax implications” and revert to me if you need more info.
Thanks for sharing the link Sreekanth. As I understand, whatever we had paid from till the registration can be claimed in five years and after registration can be claimed in this year.
If this is correct, can you please help me with the below clarification?
We took Rs.30,00,000 as loan amount and how much should I declare in the current company for Interest and Principal components – sections 24(b) and 80C?
Thanks,
Priya
Registration – I mean the construction of flat is completed in our case and possession is November 2015.
Dear Priya,
The principal repayment and interest amounts are as per your loan statement. You need to look at your statement and submit the details with your employer.
Thanks Sreekanth. The loan statement I obtained from bank is before registration completion. So, I need to look at that and enter details?
Is this correct?
-Priya
Dear Priya,
You can request for latest statement or you may download the latest one.
Thanks a lot for your time and patience 🙂
Really liked the site and your detailed explanation!
Can’t thank beyond this 🙂
-Priya
Keep visiting :).
Kindly share the articles with your friends 🙂
Yeah, definitely. It is worth visiting 🙂
Dear Sreekanth,
I have below queries.
My parents are staying in Mumbai in my own property, have home loan on the same but I am staying on rent in Pune for job purpose. I pay EMI every month.
So shall I go for deemed to be let out property option or self occupied property option and also wanted to know can I claim HRA as well?
What all the documents I will need to show to company if I going for deemed to be let out property option?
Regards,
Siddharth
Dear Siddharth,
If you have to claim the entire interest paid amount as tax deduction, you can let-out your property to parents. You have to issue rent receipts to them and you have to show this as your rental income while calculating your ‘income from house property‘.
You can also get Rental agreement done (between parents and yourself).
You can claim HRA as well.
Is it necessary for the rental agreement to be registered and the rent receipts to be issued even if the parents aren’t going to claim HRA on the same? Is it a proof of income that needs to produced by the owner?
Also, Is there a quick website that you know of to check out the rent control norms for a particular area? How can someone know the notional/standard rents?
Dear Aditya,
Registration of rental agreement may not be mandatory but if you are receiving rentals from your parents then you have to show this rental income when filing your ITR.
As of now I have not come across of any such website, will surely update you if I find one.
Sir I am staying with my parents in my parental property. I have recently bought 2 flats. One in noida and another in the same area where i am currently staying with my parents. I have a housing loan of 37 lakh for the noida flat and 98 lakhs for my other flat. I wish to give both flats on rent. Kindly advise the tax impications. Also kindly advise how I can best utilise the current situation for the best tax advantage as I prefer to stay with my parents rather than move to the newly bought flats.
Dear Banerji,
Are you a salaried person? Is your working location (assuming you are employed) far from your residence (parental property)?
I believe you may have to declare the Rs 98Lakh home loan property as self-occupied property and the Noida flat as Let-out property.
Read my article : Income from House property & Tax implications.
HI,
I am willing to take a home. Can I have my father as co-applicant for loan. Can I have my mother as the owner or co-owner of the flat. Which scenario works ?? Please do let me know as my father for sure takes loan but me or my mother will be owners of the house.
Dear Sindhu,
I believe some banks may insist your mother to be co-applicant if she is going to be the co-owner.
Some banks may agree with your father as co-applicant too. So, kindly check with your banker.
Is your father/mother earning members of your family? Who is going to pay EMIs? May I know if you are married?
Kindly read my article : Joint Home Loans & Tax implications.
Hi Sir,
I have two properties.
I am a co owner for Flat 1 along with my father and he is my co-applicant for loan .
For Flat 2 I am the sole owner but my co-applicant is my wife, who was a house wife at that time.
For both I am paying housing loan along with interest completely through my bank account online.
I used to stay in Flat 1 along with my father and have being showing it as Self occupied property and the other one is rented and disclosed rent on it in my earlier returns too. So I got housing loan exemption up on SOP with limit and also on rented property without limit on Flat 2 after reducing the rent received and taxes etc paid.
But recently, for family and health reasons I am living a rented house along with my father and paying rent through my bank account online. Myt Flat 1 is still vacant this.
Now my question is am I eligible for HRA exemption on rent paid?
If so, can I claim interest and principal paid on both housing loans?
Do both of them are to be shown as rented or one of either will have be treated as deemed self occupied for getting interest and principal paid exemptions?
Dear Kishore,
Are all these properties (flat 1, flat2 and rented one) are in same location/area?
How far is your work location from flat 1 and your current residence (rented)?
Hi,
I currently pay rent to my parents, claim HRA benefit and stay with them. The house belongs to my parents.
I’ve recently purchased another flat in the same city but i am not intending to stay in the new flat this FYyear. I’ll keep it idle.
1. Can i continue staying with parents and claim HRA?
2. Do i have to show the new flat as DLOP? Ive heard that for 1 year we can avoid showing new flat as DLOP.
3. Can i claim tax benefit on interest upto 2 lakh on the new, idle property?
4. If lets say i show it as DLOP, can i claim full interest as tax free or only 2 lakh cap?
thanks sreekanth. You seem very knowledgeable and helpful! appreciate it.
I have a flat at badlapur whose home loan have been completed so can i claim HRA for income tax benefit
Dear vanita..Is it self-occupied by you?
i am staying in rented house and claimed HRA but my own house is occupied by my parents and am not deriving any rent from it. Can you please let me know whether its considered as let out and need to provide a reasonable rent for that?
I have 2 properties. 1) with a loan of 20 Lakhs , 2) with a loan of 40 Lakhs.
The loan for first one was taken in FY2011-12 but the possession is not yet done. May be it would be done in next few months. I heard that if the construction is not completed in 3 years from home loan year, one is only eligible for rebated only on Rs 30000 ( not Rs 2,00,000). I also hear that this is applicable only to self occupied property & not let out. Is this true? I dont want to declare my second property as self occupied as interest outgo for that lone is quite high and i want to claim max income tax rebate on that.
can you pls suggest:
1) if it is mandatory to declare any one property as self occupied. Is it possible to show both properties as let out.
2) If above is not possible what is the way out to claim rebate on Rs 2,00,000 for the first property if i show it as self-occupied as the possession would be beyond 3 years of home loan.
Dear Rishit,
Yes, 3 years clause is applicable and I believe that this is applicable to both SOP & Let-out properties.
If you are employed say in a different city other than the place(s) of mentioned properties, you can show them as Let-out properties and also claim HRA.
Hi Shreekanth,
I have 2 flats, 1st flat is jointly own by my wife & me (my wife is 1st owner 2nd name is my)
2nd flat also jointly own , in this flat i am 1st owner
we are staying on 1st flat & 2nd flat is rented out @ Rs.4000 p.m. & gets cash , I am paying home loan EMI Rs.17629 p.m.on 2nd flat which is just started in Jun-15
how will do tax planning ? shall i get full Interest & Principal amount as a tax deduction.
shall i get HRA tax benefit
Dear Ajay,
1 st Flat is Self occupied property. You can not claim HRA benefit.
2nd Flat is a Let-out property. You can claim entire interest (no maximum limit) amount and principal repayment amount as tax benefits.
Kindly go through my article : Income from house property.
Dear Sreekanth
I have a flat jointly with my wife, with my wife’s name first and mine as second. However, the entire purchase price was paid by me and the maintenance too is entirely borne by me, as my wife is not working. If I am to treat this as deemed to have been let out, do I need to treat the flat as 100% in my name effectively for tax implication (I.e the entire deemed rental is taxed in my name) or can I show 50% in my wife’s name and 50% in mine. Also which site / government document does one use as basis on which one has arrived at the deemed rental?
Dear frank,
You may enter into a simple agreement mentioning that you would be paying the entire EMI (inform your banker too) and henceforth you may pay taxes on the rental income accordingly.
(You may go through this article)
Hi
I am having flat 1 in my name and flat 2 in name of both wife and me for flat 1 paid interest is 50000 and flat 2 paid interest is 400000(90% me and 10% wife) now if rental considerded for flat 1 will be around 6000 per month and for flat 2 is 10000 per month so which flat should i show self occupied and which should i show rent out please reply
Thank you in anticipation
Prashant
Dear prashant..Are you residing in any of the flats?
Hi Sreekanth,
I am having two flats. One flat is self occupied and I am claiming loan benefit from it. The other flat is vacant.
Please let me know following information
1) Which form should I fill. ITR1, ITR2A, ITR2
2) Is here a rule that I need to show any minimum rental amount as income for the vacant flat? Please note that I am not claiming any loan benefit from second flat.
REgards,
Shinto Thomas
Dear Shinto,
1 – ITR 2A (if you do not have any capital gains. Read my article on ‘Which ITR form to file?‘)
2 – Yes, you can show notional rental value. (kindly read my article on ‘Income from house property‘)
I have few queries on this topic.
I own two properties in my native. Both are let out last year. Before that, my first house was occupied by my parents and I used to state it as “Self occupied”. I live in different city on rent.
I always showed second one as let out and showed rental income to it. For the first one, last year, the tenant has paid rent on my Dad’s name(through cheque) who has no other income. Should I continue to show it as self-occupied or show it as let out.
One more question I have on my first property. I took a top-up loan on my first house and used the proceeds for constructing house in the city I am living in(Construction is not yet completed). Can I claim deduction of interest on this for the top-up loan?
Thx
Ravi
Dear Ravi,
If your first property is given on rent, show it as let-out only. Since, the property is on your name, the rental income should be included in your ITR.
You can claim tax deductions on your Top up loan on the respective property only, but you can not claim tax exemptions until the construction is completed.
Kindly read my article on : Under construction property & Tax implications.
Thanks a lot Sreekanth for your timely reply.
Ravi
Hi Sreekanth,
What is the case with the guys who have one property as SOP and the other property is occupied by parent? How that is treated in the income tax as well is wealth tax applicable over the second property occupied by parents?
Thanks in advance.
Thanks,
Shailesh
Dear Shailesh,
You have the option to treat either of the houses as SOP and the other one as let-out one.
Dear Sreekant,
I have a question. In case I own one property just in my name and other one along with my wife. What is the tax implications in that case for the second property? Can the first property would be SOP for me while second one for my wife, in case I am unable to find a tenant.
Thanks,
Tarun
Dear Tarun,
Both of you have to treat only one house as SOP.
Dear sir,
I am a salaried person and presently staying at a rented house and availing HRA benefit from employer through form 16. I have one flat which has been possessed in October-14 and was vacant in 2014-15 F.Y. I am not staying at my own flat due to long distance from my working area and the area is also not so developed yet.
I am having home loan since 2012 and I have never claimed tax benefit for this loan as the property was not possessed earlier (before Oct-14).
Now this year I want to get tax benefit of the interest part of the loan.
My questions are :-
1. Which ITR form, should I submit?
2. How to claim the interest amount of Home Loan?
3. In which section of ITR, I can put the interest part of loan?
4. How to determine the notional amount or just a lum sum can be assumed ??
5. As I have paid Interest but not claimed benefit of last 3 years, so should I claim 20% of total interest amount already paid in last 3 years upto next another 4 (1+4=5) years ??
Request to please help me by answering my above questions.
Thanks and rgds,
Soumen Kar.
Dear soumen,
1 – Kindly read my article on – AY 2015-16, which ITR form to file?
2 & 5- Regarding Claiming of tax benefits for Pre-construction period, kindly read my article on – Preconstruciton period & Tax implications.
3 – Under the head ‘Income from house proprety’.
4 – It can depend on the prevailing rental values.
Thank you Mr. Reddy for your reply. I will go through your articles thoroughly and then revert if any further doubt.
But one thing I have noted and want to appreciate that, your articles and replies are specific and easy to understand.
Thank you Soumen. Kindly share the articles with your friends 🙂
Dear Mr Reddy,
I have one property at lucknow & other property at Noida & for both i am paying home loan interest ( first it is lesser interest and second property its very hight interest amount).currently i am working in noida.my parents are living in faridabad in thier own house. can i claim home loan interest benefit on both property as let out property.As i am staying at Faridabad with parents.can i claim HRA benefit and total interrest on both let out properties.kindly suggest.
Dear Mukesh,
If your work place and residence are located in two different cities/towns, you can claim HRA & tax benefits (on two properties) as well.
Hi,
I live in Bangalore in a Company leased accommodation (which is considered under perquisites under salary. ) and I have two apartments in Delhi. One apartment is rented out . The other other apartment, I got a possession in Sept, 2014′. I have not been able to let out the 2nd apartment.. While filling my income tax , can I treat 2nd apartment as Self Occupied flat or do I need to consider the market value and pay Income tax from 1st Oct ,2014 ?
Dear Puneet,
Since you are residing in Bangalore, it is not prudent to consider the house in Delhi as SOP.
It can be considered as SOP if your parents occupy it.
Sir, my query is that I have sold my house property in Oct. 2014 and in respect of that property I was having a house loan, which I repaid using the proceeds received from that sale. And in the same month after selling my house I have purchased a new house by getting a new loan specifically for that new house.
Now my query is how should I deal with this in my IFHP In respect of Interest and principal of both the loans.
Dear Lakshya,
The tax benefits from your first property from April 2014 to Oct 2014 can be claimed and also on second property from Nov 2014 to Mar 2015.
Did you occupy the new property? (Is construction completed?)
I am having a house loan on my one self occupied house since 4 years now I would like to Completely Repay it in this financial year 2015-16,
Can I Claim the interest for the current year 2015-16 in my return of Income which to be filed in next year ?
Can I claim the Principal Amount of Loan u/s 80C in my return of Income which to be filed in next year ?
Dear Mahesh,
Yes, you can claim both in AY 2016-17. But the tax benefits aggregate limits do apply for SOP.
Hi sreekanth,
Last year i was staying in a rented house in mysore.i had bought a flat in mysore with home loan on july 2014.also done registration on feb’15 since construction was completed by then.but i have started staying in the flat only from may’15.so i would like to know whether i can get the tax exemption for both hra and home loan during the financial year 2014-15
Thanks
sanal
Dear Sanal,
You can claim hra for FY 2014-15.
Regarding tax benefits, you can claim tax deductions on interest payments during pre-construction period and also regular payments from this FY 2015-16 (AY 2016-17).
Kindly go through my article – Under construction property, how to claim tax benefits?
Thanks for your quick response.just to clarify even if the work is completed with in same year when i bought the flat(in my case it is 2014-15) will it be considered as preconstruction period? Or do we have to consider the possession date?
Dear Sanal,
When did you receive Completion certificate from your builder? Or possession certificate?
Hi sreekanth
Completion certificate on 20th march 2015
Dear Sanal,
When did you take home loan? (Loan disbursement??).
Kindly read my article as suggested. I am sure that you may find answers to your queries in that article.
Sure i vl read the article.loan disbursed on july 2014
Dear Sanal,
If both, date of loan taken and occupation date / completion date had taken place in the same Financial year, entire interest pertaining to pre-construction period can be claimed along with regular interest in the same assessment year. There is no need to claim the prior period interest in 5 installments.
Thank you
Sreekanth,
I had taken a home loan for purchase of an old housing property in 2009, and I have closed the loan in July 2015. I plan to demolish the property & construct it afresh with a new housing loan to fund this over next one year.
For the new housing loan, how is the income tax treatment for interest component going to be?
Thanks,
Murthy
Dear Murthy,
Is it a self-occupied property or a let-out property?
Hello Sreekant,
I have following question and I would highly appreciate if you could help me.
1) I have been living in China for last few years and got transferred to same company in June 2014. I joined this company in India in July 2015. I have not filed my IT return for last 8 years since I was out of India. I paid all my taxes there.
Do I need to file IT returns for all these past years?
2) I have 2 flats – one was bought in 2006 on a home loan and now it is debt free. This is on rent from August 2014. I bought another flat in same city in March 2015 by taking home loan and now it is self occupied. And for the past year from July 2014 to May 2105 I was living on a rent for which I have claimed HRA exemption.
Can I declare the recent flat taken on loan as let out and the one on rent which is debt free as self-occupied.
Secondly shall I exercise the above option for the assessment year 2015 -16 or 2016-17 since the recent flat bought was in March so the interest paid is only for 13 days for the year 2014-15.
I am not able to come up with an combination about which one to claim which year? Totally confused. Please advice.
3) Which ITR do I need to file?
regards
Nee
Dear Neeraj,
Is it july 2014 ?? (in the first point..)
If you do not have any other source of income, you can use ITR 2A to file your taxes. Read my article – Which ITR form to file?
Hi Sreekanth,
Recently (since April-2015) I am shifted to Pune due to job change and residing in rented house and claiming HRA benefits.
I owned a house at Ghaziabad which is on rent since Apr-2015. Same was purchased in 2012 through Housing Loan. I am still paying the EMI for this home but not claimed any interest benefit as I got possession after 3 years.
Now as I shifted to rented house at different location, can I declare my Ghaziabad house as Second home for purpose of income tax benefits (showing it as let out property) and claim complete HL interest as tax benefit and at the same time claim HRA exemption.
Regards,
Anurag
Dear Anurg,
Yes, you can treat the property at Ghaziabad as Let out one and claim the interest payments as tax deductions. Kindly read my article : How to claim tax deductions of Pre-construction period?
Dear Sreekanth,
I own a flat, but live in a bigger rented flat. I availed of the HRA for the rented property and have paid the IT (on market rental value) for the own flat, though it was NOT LET OUT. Now I have bought another house availing loan. I am planning to sell the first flat to clear a part of the loan, This aside, the query is what is the limit of Income Tax that I can claim on new property – both for interest and principal. I pay a huge sum as interest. Is the full interest removed from the taxable income or is there a limit. If there is a limit what is the limit?. Please advice.
Regards,
Bhag
Dear Bhag,
Are these properties in the same location & in same city?
What do you mean by ‘I paid IT’? Kindly share the info..
Dear Sreesanth,
Thanks for the prompt response.
Yes. Both houses are in the same city and within 10 kms of each other.
I am a salaried person, thus TDS was deducted based on salary. My auditor asked to show some rental income (notional atleast) though the property was vacant. Thus, I had to pay the income tax on the assumed rental income under OTHER INCOME as I was staying in another rental property.
Now, I have bought another property and am paying a huge interest. I am planning to move to the new flat and thus have to file returns under SOP.
Which is more beneficial – SOP or to take a rented house?
Filing returns with SOP is more beneficial
or
renting out the new flat, show rental income for the new flat and pay tax for the rental income, avail HRA as avail full interest as benefit?
Hope this clarifies the query.
Regards,
Bhag
Dear Bhag,
Your auditor is right in showing notional rent for a vacant property.
You have 2 properties in the same location/city. So, if you can be able to justify for taking a rented accommodation then it is ok (this is purely subjective). Else, you should not claim HRA.
The property where interest outflow is high , consider that as Let out property (but you have to calculate the net income from this property and then decide) and consider the other property as SOP.
Dear Sreekanth,
Thank you for the inputs.
I am selling the first flat (debt free now) to settle the huge loan amount for the new purchased property. In this scenario, I will left with only one flat (new). This flat is around 22kms away from place, so planning to go for a rented flat around my workplace and let the new flat out for rent.
Now,
I will declare whatever rental income I get from the new flat,
pay the taxes for rental income,
claim HRA,
deduct the full amount as paid towards interest.
Is this good enough? I do not want to deviate from any IT regulations.
Regard,
Bhag
Dear Bhag,
I think this should be fine.
Hi,
I am a co-owner in 2 flats, one jointly owned with my mother and other jointly owned with my wife.
The one jointly owned with mother is debt free. It is occupied by my mother.
The one jointly owned with wife – interest is being claimed under SOP.
Please suggest
Dear Vikram…What is your query?
My query is.. which of the jointly owned flats would be considered as SOP and which one let deemed to be let out.
If I plan to buy one more property solely in my name, can the other two properties not be considered as deemed to be let out if one is occupied by my mother and other by my wife?
Dear Vikram,
You can declare only one property as SOP. All the other properties are treated as LOPs.
Do note that husband n wife are expected to consider the same property as their SOP.
Hi Sreekanth,
Facts of the case
1. A person owns 2 houses in Delhi. Both of them occupied by his extended family.
2. He is a foreign national (person of Indian origin)
3. Now he has come back to Delhi and works with a company which has provided him rent free accommodation in Delhi itself.
4. He along with his wife and his kids stay in the company provided accommodation.
I have some tricky questions here.
1. Does stay of the extended family (father and mother of the person) make that house a self occupied house for this person?
2. Can he avail the benefit of notional valuation of company leased accommodation and claim one of the 2 houses he owns as self-occupied in his Tax Return?
Would appreciate your prompt response. Thanks in advance.
Dear Anmol,
Are these three properties in the same locality or near-by?
If an Assessee has multiple properties, only one property can be treated as a SOP.
He has the house in the same city at different locations. So whether claiming one house as SOP be right when company is providing him a different accommodation in the same city.
Further, does stay of family allow the person to claim one house as SOP when he himself is not staying there?
Dear Anmol,
Actually tax law is very subjective wrt this point. If an Assesse finds it very difficult to commute to his / her place of work (or due to any other justifiable reason), he can stay in a rented accommodation and claim HRA .
As both the houses are in same city, i believe they should be deemed to be ‘let-out’ properties. Very very tricky situation 🙂
Hi Sreekanth,
I stay in a rental flat in Bangalore for the last few years and have two house in another city. Both these houses are earning rental income. I have been out of a job since I came to Bangalore to handle my son’s education. I use the rental income for paying my rental in Bangalore and for other related house hold expenses.
Now can one of the above house owned by me be treated as self occupied as I am not getting any benefits of HRA?.
Kindly advice on the income tax treatment in such a case as well as highlight what exemptions I can claim while filing my income tax?.
Would appreciate your response. Thanks
Dear Balachandran,
Do you have any home loan on any of the properties? Why do you want to declare one SOP? (I did not get your point).
Are you planning to take up a job in Blr? Were you employed in FY2014-15?
Dear Sir
What are the advantages and disadvantages of the first home (SOP) being entirely in the name of the husband with the loan entirely paid by him and the second home being bought in the name of the wife with the loan in her name. Both are self employed.
Dear Edison,
It depends on the income levels 🙂
Hi Sreekanth,
its very nice and informative article. I have a qeury.
If I own house in city A and work and live in city B on rent, can I declare house in city A as “deemed let out property”. Also, can I get tax benefit on HRA for rent in cityB.
What is the difference bw “deemed let out property” and “let out property” in terms of tax implications
Dear Ankit,
There are no differences wrt to tax implications for deemed let out & let out property.
Deemed let out property : For ex 1- If property is let out only for 1 month and remains vacant for 11 months, still it can be treated as ‘deemed let out’ property.
Ex 2 – If house is self-occupied for 2 months and let out for 10 months, the property can be treated as ‘deemed let out’ one.
Hi Sreekanth,
we have a flat which is jointly with father.
can i pay rent to father as he is co-owner in flat.
Dear Rohit,
As you are the co-owner of the property, I believe that it is SOP (self occupied property) for you too.
Hi,
I own two houses within the same city. I’ve home loans on both the houses. So can I claim 2 lacs exemption for the SOP under sec 24(b) PLUS the entire interest for the home loan on the LOP (since there is no limit for the interest component on a LOP).
thanks
-ankit
Dear Ankit,
Yes you can claim the tax benefits..
Hi Sreekanth,
I am living in a flat which is co-owned by me and my father (50-50 percent share). Can I pay rent to my father and avail income tax benefit on rent paid? Of course my father can show the rental income in his return.
Dear Vishwas,
If you are the co-owner of the property and residing in the same property, you can not claim HRA.
Dear Sreekanth ji,
I have purchased one home in the year 2004 through home loan and prepaid the amount in May 2014. I have given that house on rent and myself remained in rented house and claiming HRA and showing income from rented house. On January 2015, I have purchased one more house in the same city through home loan and still continue to be remained in Rented house. I have given that house to my relative. What should I do now? How to claim HRA benefits and interest and principal benefits for calculation of IT purpose
Dear Mohammad,
Are these properties located in the same city/town? Are they close by to your working place?
Hi Sreekanth,
I currently stay with my dad. The house is in my dad’s name. I pay him rent so that I can claim the HRA as a tax benefit.
This house is my dad’s single property. He comes under the Senior Citizen category.
1. Should my dad show the “Income from one house property” as ‘Self Occupied’ or ‘Let Out’ ?
2. Does he need to show the rent as income or will he have to calculate the annual value of the house ?
Appreciate your feedback.
Dear Parag,
He has to show it as ‘let-out’ property (actually it can be called as partly let-out, as he is also residing in the same property).
Yes, he needs to show the rental income as ‘income from house property’ in ITR along with other income (if any).
Hi Sreekanth,
I work in Bangalore and stay i n a rented house. I purchased a flat in Bangalore(Booked on June 2015). Loan sanctioned on Aug 2015. I started paying EMI from October 2015 and the registration of the flat is done on Dec 2015. Took possession on March 2015.
I have submitted my HRA details to the employer and the details are reflecting in Form-16. But Home loan interest details are not provided to the employer. I would like to show this when filing my returns. I have few questions on this.
1) In FY 2014-15, this house cannot be considered as self occupied /let out/deemed to be let out as the constuction was completed in Mar 2015 and possession on last week of Mar 2015. So what to mention while filing IT returns.
2) If this should be considered as deemed to be let out, then what amount can I show as deemed rental value
3) Where can I adjust the Interest when filing IT Return. Should I adjust it with total income or show the value as negative in Income from House
Thanks in advance
Regards,
Riju
Dear Riju,
Kindly check the dates and are they correct??
Hi Sreekanth,
Thanks for your immediate attention on my query. It was a typo error from my side. Please read it as 2014 instead of 2015 for all the dates except for possession. Possession on Mar 2015.
Regards,
Riju
Dear Riju,
Right now what is the status? Is it self-occupied by you or did you let it out?
For financial year 2014-15, you can claim HRA for full year.
For financial year 2015-16 (you file taxes in july 2016), you can claim tax exemption for the interest paid in 15-16 and you can also claim tax benefits on EMIs paid
during per-construction period too (subject to the aggregate limits).
Calculate the total interest paid during the pre-construction period. The period to be considered here would start from the day you take the home loan and end on 31 March that comes immediately prior to the date of completion of construction or date of repayment of the total loan, whichever is earlier.This has to be done in five equal installments commencing from the financial year (FY) in which the construction of the property has been completed.
Also, make sure that while filing income-tax return, you separately mention the pre-construction interest claim in the relevant box and the interest paid during the year in another.
Sreekanth,
It is not occupied or let out… planning to let it out soon
Also, as per my understanding, I can claim interest during pre-construction period if possession and loan approved year is same. Please correct me if I am wrong.
Also, I cannot find a separate colum for showing pre-construction interest in ITR1
Dear Riju,
For Assessment year 15-16, you are eligible to claim pre-constructin period EMI as tax benefits.
Separate column in the sense, mention it separately. But for this AY, you have only pre-construction EMIs..but from next AY, you can claim both
pre-construction (if any) & normal EMIs.
Hi Sreekanth,
i have a home loan which is for let-out and interest paid is around 1.7 lacks.
i am planning to go for another home loan for an amount of approx 80 lacks, where the interest per financial comes to 9 lacks.
Is there any limitation on the no of home loans that to be considered for tax exemption and also is there any limit as such?.
In the above scenario am i exempted for tax for an amount of 10.7 lacks + ((Rent received -M.Tax) -30% deductible as per calculations?).
As it is let out hope wealth tax will not come into picture.
Dear Madhav,
Are you going to let-out the second property too? Are they both in same city and location? Are you employed or self-employed? If employed, is your place of work same?
i am staying in house coowned by my parents. can I claim HRA by paying rent to them?
Dear Dhiwakar,
If you are the co-owner of the property, you can not claim HRA allowance.
Hi,
My question is regarding tax implications in case of 2 house properties. The scenario is as follows –
Property 1 – I bought a flat in October 2012 in Pune whose possession will be given in August 2015. The property is jointly owned by myself and my wife. I have taken a home loan for the property and my wife is a co-applicant in the home loan as well. The balance loan amount is around 40 lacs.
Property 2 – I have bought another flat in Pune in May 2015, which is a ready possession property. The property is jointly owned by myself and my wife. I have taken a home loan for the property and my wife is a co-applicant in the home loan as well. The loan amount is around 60 lacs.
I am immediately moving into property 2 in June 2015.
I will be renting out property 1 in September 2015 as soon as the possession formalities complete.
Question 1 – Can I consider property 1 as Self Occupied and property 2 as Deemed Let Out as this will help me save maximum tax exemption (Home loan on 2nd property is more than home loan on property 1).
Dear,
If you are going to occupy Property-2, it becomes your self-occupied property. May be, once you get the possession of peroperty-1, you can occupy it (if possible). September is just few months away..
Due to my office location, I am going to stay in property 2 and will let out property 1 in September.
Question – Can I consider property 1 as Self Occupied and property 2 as Deemed Let Out as this will help me save maximum tax exemption (Home loan on 2nd property is more than home loan on property 1).
I own two houses in Pune. One is occupied by my parents (no rent) & second is rented out. Loan for the house occupied by my parents was closed long ago & loan for the other rented house is ongoing. I stay in Mumbai in a rented house as I work in Mumbai.
Can I claim full interest rebate on the house which has been rented out? Due to low rent, the income from house is far below interest paid – I could save some tax. Can I also claim deduction based on the rent paid by me in Mumbai.
Dear Kiran,
Yes, you can claim total interest amount paid on your ‘let out’ property (Pune) as tax deduction u/s 24.
You can claim HRA allowance (if any) too.
Thanks for the reply. Somehow my office accounts seem to have an impression that I can claim full interest deduction only if both my home loans are running. Now I can show them your response & try & convince them. Thanks again. Can you tell me in which section of the tax rules can this be found so that I can extract that & show it to them?
Dear Kiran,
You can claim your HRA allowance as you are in Mumbai (Section 10 – 13A).
You can claim tax deduction on your Pune property (Principal repayment under section 80c & Interest repayment – full amount – under section 24 b)
I have two properties in same city and taken two home loans. one property is declared as self occupied and another as let out.
Can i avail HRA benefit if i stay in a rented house in the same city.is it allowed.
If i stay in a rented house ,should i declare both of my properties as let out to avail tax benefit or can it be declared one as self occupied and another as let out as i did.
Dear BK,
Will you be able to justify if at all there is an inquiry, as to why you are not residing in one of your properties..
I paid home loan emi interest of rs. 1,35,856/- and pre-emi interest of rs. 1,26,896/- can i cliam both ? if yes, pls. let me know the sections seperately.
Dear Srinivssan,
Is this property a self-occupied one or a ‘Let-out’ property? Did you take the possession of the property?
My Colleague has taken a home loan. But he is either staying there or he is not getting any tenant. So there is no income from that property. At the same time, he is staying in a rented house – where he pays rent.
Can he claim both benefits of (Principal u/s 80C) and Interest u/s 24D
also
HRA Exemption as per rule /
kindly advice
Regards
Srinivasan Ramesh
Dear Srinivssan,
Are both the properties (own & rented) in same city/town?
Dear Sir,
Me & my wife both are working in IT sector at Pune and both are in 20 % bracket. We plan to buy two ready flats at Pune costing around 50 and 30 lakhs. These will be our first properties and will be financed by loan. These are located in adjacent areas. We will be occupying one of the flats. Please guide as to
• How we shall take the loan/own the properties, jointly or separately for both properties to minimize the tax liability.
• Will the principal and interest deduction available for both of us
• How will be tax treatment in case of unoccupied flat
• What will be the tax treatment if we live in our ancestral house at Bhosri, near Pune and rent out both properties
Dear Bharat,
Since you are opting for home loans, declaring the ancestral property as ‘self-occupied’ one could be very beneficial. Do note that you may not be able to claim HRA benefits.
If you declare both the properties as “Let-out” ones, you can claim the entire ‘interest amount’ that is payable on both the loans as tax deduction, under section 24.
Suggest you to go for joint-homeloans. Yes, tax deductions are available for both of you, in the proportion of the loans taken. But, few questions – What if your spouse is unable to continue working? Can you be able to fund the EMIs with your own income?
Re-check if you are over leveraging yourself? Are you allocating any savings towards your retirement goal? (Retirement goal should be your topmost priority)
Hi Sreekant,
This is very nice and useful article.
I have following query.
2 Years back,. I bought one house in Noida , and i will be getting possession for same in somewhere between Dec,15-Feb’16. I am first applicant and my mother is joint applicant in Home as well has Home Loan.
Expected Interest Amount to be paid for this Home in FY-2015-16 is around 1.50Lac. For the whole FY 2015-16, this home will remain unoccupied.
I also bought one flat in Navi Mumbai and i got possession in First week of April’15. My dad is First applicant and myself Second applicant in Home as well as Home Loan. Expected Interest Amount to be paid for this Home in FY-2015-16 is around 4.50Lac. Myself along with my parents will be living in this flat.
But after some time i m planning to move out to live on Rent in Mumbai City as my office is far away from Navi Mumbai
In this case, can i claim all three ir HRA and HL Interest on Self Occupied and HL Interest on Let Out ?
Can I select My Noida’s flat as Self Occupied and Navi Mumbai’s flat as Let Out Property (as Interest portion is Higher for Mumbai’s flat)
Also how can i calculate notional Income for let-out flat, what proof do i need to submit for this.
Thanks in advance.
Dear Shikhar,
Based on the info provided by you, you claim all three.
Noida property can be treated as self-occupied (assuming your parents reside there). Mumbai property as ‘let-out’ provided you have justification (like the one, mentioned by you).
There is no need to submit any proofs to the IT department. You have to give rent receipts to your tenant and also get ‘rental agreement’ done. Keep a copy of all the bills related to maintenance of property / property tax receipts etc.,
Hi,
I bought a flat on loan at Hyderabad and my parents are staying in that flat. I am staying in Pune. can i claim the interest i pay as loss from house property so that i will get exemption more than 2 lakhs. Please let me know your thoughts.
Regards,
Teja
Dear Teja,
If your parents are residing at Hyd, then the property has to be considered as a Self-occupied property only.
If your parents pay rent to you, that property can be considered as Let-out property. Kindly note that you need to give rent-receipts. Also, it is justifiably if they have some source of income to pay this rent.
Very useful info..
I have one question.
I own a joint property in Hyderabad where my mother (also my brother) are staying who is one of the joint owners of that property. Am staying with my wife in Chennai in rented house. Now my question is Can I claim HRA for Chennai by declaring self occupied for Hyderabad? as I don’t get any rent for Hyderabad house. (Note: Mom is not working and brother won’t claim any HRA for that house). If yes, do I need to submit any document for this. Is there any format for this document? Please let me know.
Dear Kanth,
Yes, you may claim the Hyd property as self-occupied one, as your mother is residing in it. There is no declaration as such.
You can claim HRA.
I own two flats one in home town which is let-out and one in current work location which is self occupied. Both have home loans running but the one at home town has smaller loan and earning smaller rent amount whereas the second one (at work location) has higher loan and higher rental potential but is self occupied. Tax-wise it would be great if I could declare the reverse, but is it acceptable to the govt? I think it would be weird to show that I am living in home town but working here. But if allowed, what do I have to show to substantiate it? And can I then show HRA separately here since I am deemed not living here in my own house? How can I benefit the most in this situation?
Dear Uday,
Are your parents residing in your home-town? If yes, they can stay in your hometown house and you can declare it as a Self-occupied house.
To declare the currently occupied house as ‘let-out’, you need to have valid reasons like the work location and property location is very far..then you can ‘let-out’ the property (remember, if need arises, you need to justify your declaration).
Dear Sreekanth,
Thank you for sharing the knowledge you have acquired and doing this service.
I have a query on sec 24.
Let us say a person is staying in self-occupied property and intends to buy another house in the same city, then does it make sense to buy the new house as a joint property or individual property ?
My understanding is that the new property must be deemed as “let-out” and the rent earned must be declared as income. Secondly, there is no upper limit on the quantum of tax deducted so there is no benefit in going for a joint property.
Eagerly waiting for your response
Regards,
Balaji
To generalize the question.
Is there any advantage in going for a joint loan for a 2nd house in the same city ?
Dear Balaji,
Is the co-borrower an earning person and a tax assessee?
Yes, co-borrower is an earning person and a tax assessee at 30% tax rate
Dear Balaji,
Then the co-borrower also can claim the ‘interest portion’ under Section 24 right? (ofcourse, in proportion to his/her share in the property).
Thanks for the reply.
My thinking was that the rent generated from 2nd house is completely taxable and hence there is no upper limit on the benefit from Sec 24 (i.e., 2 lakhs for individual or 4 lakhs for joint loan). Hence i did not see any advantage in going for a joint loan.
Pls. correct me, if i am wrong.
Dear Balaji,
The entire interest amount paid towards home loan can be claimed. I think you are misunderstanding the ‘upper limit’ concept here.
Hi Sreekanth,
I have a home which i have taken in year May, 2011.
I have been paying interest on this loan as below:
FY 2011 – 2012 : Interest INR: 1,95,000
FY 2012 – 2013 : Interest INR: 1,82,000
FY 2013 – 2014 : Interest INR: 1,71,000
FY 2014 – 2015 : Interest INR: 1,65,000
Now, for the FY 2014-2015, i have claimed whole interest of INR 1.65,000 for tax exemption for interest on housing loan (as housing loan exemption limit is raised to INR 2,00,000). So, i can still claim tax benefit of INR 35,000 (2,00,000 – 1,65,000) towards tax rebate for housing loan interest for FY 2014-2015
But for other financial years, i was claiming only INR 1,50,000 towards tax exemption for husing loan interest.
Can i claim the left over interest for FY (2011-2012, 2012-2013, 2013-2014) in the FY 2014-2014 i.e.
INR 45,000 from FY 2011-2012 , INR 32,000 from FY 2012-2013, INR 21,000 2013-2014
Thanks, Anurag
Dear Anurag,
You can not claim the left over interest amounts.
When did you take the possession of your property?
Dear Sreekant,
Loved your blog. I am looking for an answer on following queries.
CASE
I own a property in Lucknow where my parents stay and after my transfer to a new location I have bought a new house at Pune.
There is no loan on the Lucknow property but there is a loan which I will take for Pune property. I have a choice of deciding the loan amount. If I go for 60 Lac loan the yearly interest is about 5Lacs per annum( which is higher than the 2Lac limit) In another case if I go for 40 Lac loan the interest component is about 3Lacs per annum( which is nearer to the 2Lac amount).
I do not need to claim any benefit in 80C from house property as I am fully covered from other savings.
I have following questions
a) Which is the most beneficial case financially – Declaring lucknow property as self occupied and Pune property as Deemed Let out Property or vice versa.
b) Is it necessary to declare income from house property in income tax return even to claim the standard benefit of 2Lac p.a. benefit on interest exemption.
c) If the answer to b) is NO Is it beneficial to take the 2Lac per annum limit or is it beneficial to maximize loan and take benefit of loss from house property.
Thanks in advance.
Regards
Dear Sharad,
Are you a salaried person? Are you claiming any HRA?
Yes I am salaried and as I am currently at Pune I am claining benefit under HRA.
To add I am claiming HRA as I am currently in rented apartment. I will move to the new house In Jun15
Dear Sharad,
Your Lucknow property is occupied by your parents, it can be treated as self-occupied property.
The Property at Pune can be declared as ‘letout’ one provided that you have good and valid reasons for staying in a rented property (in pune). If you do not opt for this, suggest you to go for Rs 40 Lakh loan (if taxation alone is your priority). Incase, if you declare pune property as “Self-occupied”, you may collect rent from your parents (if they have source of income) and treat Lucknow property as ‘let-out’ one.
Yes, to claim the standard benefit, you need to show the income/loss from property in ITR.
Hi,
I live in Mumbai and stay in a rented place and claim HRA, I am planning to buy a home in Bangalore where my parents would be staying. Now I will continue to claim HRA in Mumbai and Principal/Interest for the house in Bangalore. My question is since the interest I pay would be more than 6 lakhs (much more than the limit for self occupied property), would it be prudent and legal to let it out to my parents for a nominal rent, such that the extra benefit I get from 6 lakhs in let-out to 2 for SOP would outweigh the tax I pay for the rent I receive from my parents. Thanks
Dear Deepak,
It is ok to claim HRA though you have a property in Mumbai, as long as it is justifiable then it is ok.
Let me know if your parents have any source of income?
i was staying part of the year in self house & part of the year in rented house in different city,so my question is for calculation of HRA exemption full year of salary to be taken into consideration or the rented period of salary to be taken ?
Dear Pramod,
You have to consider the ‘rented period’ for HRA purpose.
Thank you so much. Very informative blog. My situation is bit different from all the above cases. We live in Hyderabad i a rented house, and we(me and my husband jointly) own a house in Bangalore which is let out. Now we are claiming tax benefit for that and HRA also. Till this point everything is clear. But now we are purchasing one more house in Mysore and taking second house loan. Both houses we own will be let out. So my question is
* Is it mandatory to declare at least one house as self occupied even though we don’t live there?
* As both are let out properties can we claim total tax exemption for interest paid on both the houses along with HRA?
Dear Arpana,
Thank you for your appreciation.
1- It is not mandatory (but the reason should be justifiable as in your case)
2 – Yes, you can claim total home loan(s) interest amount
Keep visiting and do share the articles with your friends. Cheers!
Fantastic website for lot of information. But i still have a doubt, please resolve.
I live in a house bought by my father but my name added as co-owner.
Now if a buy a flat with my income how is this flat treated … self occupied or let out ?
Dear Rahul,
Thank you!
Since your name is added as a co-owner to the title deed, the house you are living now is treated as a Self-occupied one.
If you buy a flat and rent it out then it is treated as “Let-out” property.
Thank you for such a prompt reply.
I still have a doubt ..
1. My parents stays in the house with us, for him this is Self Occupied house (he his first owner)
2. My earning spouse co-owns the FLAT and the 50% loan repayment too … will that be Self occupied for wife ?
I have checked many websites … no where i could find the clear solution for this case.
Thanks for addressing it partially for me. It would be nice if you could ans these two too.
With Regards
Rahul
Dear Rahul,
The ownership of the property is the main criteria here.
1- You are the co-owner of the property (the one you have occupied), so it is a self-occupied house.
2 – Let me know if the self-occupied property and your Flat are in same location (place/city)?
(Your query is really an interesting one!)
Yes they are in same city … nearby ..
First Home ( presently staying in) is bought by father … he put my name as co-owner … we stay together.
Second flat … i bought jointly with spouse .. we share loan 50% each.
Now i am confused …
ok for me the flat is second house .. what about my spouse ?
Thank you for such a prompt reply.
I still have a doubt ..
1. My parents stays in the house with us, for him this is Self Occupied house (he his first owner)
2. My earning spouse co-owns the FLAT and the 50% loan repayment too … will that be Self occupied for wife ?
I have checked many websites … no where i could find the clear solution for this case.
Thanks for addressing it partially for me. It would be nice if you could ans these two too.
With Regards
Rahul
Dear Rahul,
I believe your spouse can also consider the Flat as ‘Second house’ (or) Let-out property.
Thank you Sreekanth. I will approach you separately for
further planning.
With Regards
Rahul
Dear Rahul,
You are welcome. Keep visiting!
Hi Sreekanth, I am staying in a rented property and own a property in the same town. The property that i own is currently not on rent as i have received possession in September 2014 only. Please let me know if the ceiling limit will be 2 laks or will there be no ceiling limit for home loan interest exemption.
Dear Amit,
If you are staying in rented house (in-spite of owning a property in same town), the self occupied property will be treated as a “Let-out” property. But, the reason for you staying in a rented accommodation should be reasonable and justifiable.
Even if the own property is vacant, it is treated as a ‘let out’ one.
For let-out properties there is no ceiling limit wrt home loan interest tax exemption.
Hi Sreekanth,
The article is informative.
Could you please clarify in the following case?
I have a bought an house in my hometown (other than where I currently reside) and I have let out the property.
I am staying in a different town and staying in a rented house (doesn’t own a property in this town)
The house in my home town is treated as SOP or DLOP? (Adding a definition of DLOP may help)
What are the exemptions for Principal and Interest?
Dear Kiran,
Thank you.
The house in your home town is considered as ‘Let-out’ property.
Principal – under Section 80c : Upto max Rs 1.5 Lakh
Interest Amount – under Section 24 : No ceiling limit as your property is a let-out one.