Second house - interest claim

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 June 2013 I have one self-occupied property and I have booked one more house. The new house is under construction and not registered yet. The loan on self-occupied house is fully paid. The house under construction there is housing loan and Interest expense. The possession/registration of the new property will be in Feb 2014.

The query is, considering the new house as “deemed to be let out” from feb-2014, can the loss (full interest paid against loan in 2013-14) against housing property be claimed in FY 2013-2014? As the house would not be rented in FY 2013-2014, can the rent income be considered as NIL?

Guest

Guest (Expert)

26 June 2013 yes second new house will be considered as deemed let out in 13-14.

And the interest payable in 13-14 along with the pre construction interest is allowed as deduction u/s 24 b(as interest on housing loan)

Rent income may be considered as NIL.
But then also the property will be taxable on the basis of
Fair Rental Value or Market Rental Value, whichever is higher, subject to the maximum of Standard Rent.

Querist : Anonymous

Querist : Anonymous (Querist)

26 June 2013 Thank you very much for your kind advice.But since my house will not be ready (I mean to say it cannot be in livable conditions as I have do some furniture ) still I have to considered Fair rent/ Market rental value from FEB 2014 or I can claim Rent as NIL ?

Please Advice

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Guest

Guest (Expert)

26 June 2013 Furniture is not mandatory to make a property let out. A property can be let out without furniture also.

The property not in state of let out, it means the property is lacking necessary features, due to which no one is ready to take it on rent.

Hence, if this is the situation with you, then the property is not taxable. But make sure the property must miss necessary features which is required in building.

Querist : Anonymous

Querist : Anonymous (Querist)

26 June 2013 Thank you very much . I will make sure if buildings lacks necessary features and because of that no one is ready to come & stay there then I can take Rent as NIL and also claim full Interest for this along with Pre- construction Interest in 5 equal Installment. Right sir ?

Guest

Guest (Expert)

26 June 2013 Interest deduction will be begin from the year when property either claimed as self occupied, let out or deemed let out.

Or in short when the property is assessable under the house property.

In building lacks in necessary features, the interest amount will not be available for deduction.