Income from House Property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 June 2010 In case a person owned a house as a co owner with his wife ,there is no spefic share as per the registry/deed.Is it good to show 50% each of the rent they received in each return?The house is from the borrowed funds and EMI for that goes from the Joint bank a/c they both are maintaing,though credit in the a/c comes from the Salary of the person.Wife is also having some income from tutions etc but has never filled her return.

Furhter before this year property was self occupied & interest was being claimed by the person himself as no return was being filled by his wife ,but now she also wants to file her return with 50% renal income & 50 % interest deduction?

Also now they leave in another rented house whose rent is being paid by his employer ,and he wants to take deduction of HRA as per IT Rules.

Is all this as per law?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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23 June 2010 For employment purpose the employee staying other than his own house the both Housing interest and HRA can be claimed.Since your case employer paying rent you should calculate the Rent free accmodation valuation not HRA calculation

Querist : Anonymous

Querist : Anonymous (Querist)

23 June 2010 Thanks for the reply,infact employer is only paying the fixed amount as allowance & not paying directly to the landlord ,is is a part of salary.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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23 June 2010 If the employer paying fixed allowance to meed the rent expenses you are eligible for claim HRA

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Querist : Anonymous

Querist : Anonymous (Querist)

23 June 2010 Again very much thanks for giving the explanation.Further i will be greatful in case get an opnion on other part of the question also regarding diving of income/interest cost in I tax return of husband/wife as per my query.

CA Sanjeev Kr Jain

CA Sanjeev Kr Jain (Expert)
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23 June 2010 for first part

since entire episode is too complex and too keep continuiety it would be best that staus co is maintained and only husband should claim interest on house loan

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Querist : Anonymous

Querist : Anonymous (Querist)

24 June 2010 Yes that is right ,but as husband is already in the highest tax bracket,they want to show half income of wife ,as mentioned property is in both name ,also this is the first year that have got any rental income before that it was being self occupied.

Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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31 July 2024 Here’s a detailed breakdown of how to handle the situation you’ve described regarding income from house property and other tax-related issues:

### **1. Co-Ownership and Income from House Property:**

#### **Co-Ownership and Sharing Rental Income:**

- **50% Sharing of Rental Income:**
- Since the house is co-owned by you and your wife, it is reasonable to show 50% of the rental income in each of your returns, assuming no specific share is mentioned in the registry or deed.

- **Declaration of Rental Income:**
- Both co-owners should declare 50% of the rental income in their respective income tax returns. This is in line with the Income Tax Act, which allows co-owners to share rental income proportionately.

#### **Interest on Borrowed Funds:**

- **Interest on Housing Loan:**
- The interest on the housing loan can be claimed under **Section 24(b)** of the Income Tax Act. If the property is co-owned, you can claim the interest deduction proportionately. So, both you and your wife can claim 50% of the interest deduction each.

#### **Tax Returns and Filing:**

- **Filing Returns for the Wife:**
- Since your wife has some income from tuitions and will now be sharing rental income, she should file her income tax return showing 50% of the rental income and 50% of the interest deduction.

- **HRA Deduction:**
- If you are living in a rented house and receiving HRA, you can claim the HRA exemption. Since your employer is paying a fixed amount as HRA allowance, you can still claim HRA if it is part of your salary, but ensure you are in compliance with the HRA rules. HRA is claimed under **Section 10(13A)** and you need to provide details of the rent paid.

### **2. Important Points to Consider:**

#### **Division of Income and Deductions:**

- **Income Declaration:**
- For accurate and legal tax reporting, divide the rental income and interest expense as per the co-ownership agreement. Each person should declare their share of income and deductions in their respective returns.

- **Claiming Deductions:**
- Ensure that both you and your wife are correctly claiming the interest deduction proportionate to your share of the loan. If the loan is taken jointly and EMI payments are made from a joint account, this approach is correct.

- **Self-Occupied Property:**
- In the past, when the property was self-occupied, only one person could claim the interest deduction. If this year, the property is let out, ensure the deductions and income are split correctly between you and your wife.

### **3. General Tax Filing Guidelines:**

- **Accuracy:**
- Ensure that all income and deductions are accurately reported in each return. Inaccurate or inconsistent reporting can lead to issues with the tax authorities.

- **Document Proof:**
- Keep documentation of the property ownership, loan statements, rental agreements, and EMI payments. This will be useful in case of an audit or any queries from the tax authorities.

- **Professional Advice:**
- Given the complexities involved in tax filing, it’s advisable to consult a tax professional or chartered accountant to ensure compliance with all legal requirements and optimal tax planning.

By adhering to these guidelines, you can ensure that your tax filings are accurate and in compliance with the law.

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