It declaration on 2nd house

This query is : Resolved

Kunal (Querist)
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15 April 2013 Hi,
I am already having house at Ahmedabad for which i am paying home loan EMI of 18000(20L Loan), which is occupied by my parents. Now i am going to get another house in Bangalore for me. For 2nd house, which will be on joint name of me and my wife, i will have loan of 40L (EMI 39000).
1. To get maximum benefits, which house should i declare as Self-occupied and which one as rent-out?
2. Second house is co-own and co-borrowed by me and my wife at 70:30 ratio, is this fine?
Thanks,
Kunal.

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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15 April 2013 for any of the house given information is not sufficient

bcoz taxable Rent (i.e.GAV) of both the house is required to compare

i also want to tell u that in case of Self Occupied Interest is Restricted to Rs.150000/-

so with the information available it can be said that if you take 2nd house as Self Occupied your Interest would be more than
Rs.150000/-

but as the Rent amount would also affect the taxability
it can be calculated only after comparing the Rent

Also since the house is in Joint Name you will get deduction of Rs.150000/- each

Kunal

Kunal (Querist)
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15 April 2013 Sourabh,

Thanks for your reply.....Rent for Ahmedabad is nil right now as my parents are staying there but as per minimum i can say it would be around 8k per month. For bangalore house, it would be around 21k per month.

Now, can you give me answer to my questions?

Thanks,
Kunal.

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CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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15 April 2013 If you take 2nd house as Self Occupied it will save tax

you can understand this with the following

1st house 2nd House
your share Wife share

8000X12= 21000X12
Rent 96000 176400 75600

Less Interest 210000 294000 126000

loss from house proprty 114000 117600 50400

Loss when 1st house is Self Occupied it will be restricted to Rs.150000/-
then total Loss will be

Rs.150000+Rs.117600 = Rs.267600 + wife Share 50400 = Rs.318000/-

Loss when 2nd house is self occupied
Rs.150000+114000 = Rs.264000 + Wife Share 150000 = Rs.390000/-

so on the basis of Total Loss (including wife's Share) 2nd house is better option

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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15 April 2013 in 2nd house loss from house Wife's Share is Rs.126000