house property query...

This query is : Resolved

Karan Teli (Querist)
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25 January 2011 Dear Expert,

A person has a house property which is sold in december and purchases/registers/possess a new one in January, but he continues to stay in old one by paying the rent to the new owner of old house since he has made some furniture in newly purchased house..
does the deeming provisions apply and what about sec-24(ii) assuming he`s paying interest on old and new property....

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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25 January 2011 Interest Paid to Specified Institute is Only Allowable.
and Not Deemed Provisions

Karan Teli

Karan Teli (Querist)
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25 January 2011 Thank you MR. Ayush, but my query is whether the new house is treated as deemed one or not and please let me know the refernce to the act

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sivasankar

sivasankar (Expert)
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26 January 2011 Hi,
To consider a income a deemed let out rental income ownership is the main criteria.
In your case the person is staying in his old house as a tenant and the house is not self occupied.
Moreover he cannot continue to pay the loan on old house because the purchaser of the old house will not get clear title until the old house loan is closed,hence old house loan must have been closed before registration of sale deed of the old house.

Karan Teli

Karan Teli (Querist)
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26 January 2011 Thank you so much..,
but what about the new house..
is it to be treated as deemed to be let out...?

sivasankar

sivasankar (Expert)
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26 January 2011 Hi,
Since the new house is under construction that is in finishing stages (carpentar work)it will not be subject to assessment and hence no question of self occupied or deemed let out.You can claim 80GG also for the rent paid to old house if other conditions in 80GG are satisfied.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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26 January 2011 In case the construction work (which is considered different from furniture work)is completed . the owner can treat the property as self occupied property by taking its Net Annual Value at NIl and he can claim deduction U/s 24 in respect to the new house. As such no need to take it deemed let out as the assessee has got an option to treat one property as his SOP provided no rent or other benefits have been derived from it.