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Income /loss from lent our house property

Vachaspati Dubey (Job) (47 Points)

22 May 2013

Dear All,

I have one question which I am not able to understand.

An employee in my company wants following deduction from his income from salary.

1. He is having a house in Noida and he lives in Noida in another house in Noida on rent.

2. He is claiming that he has rented out his property which he & his wife owns.

3. He is claiming loss against house property (lent out) based on following calculation.

He is getting a rent of Rs. 200000 for year.
He is paying interest Rs. 1500000/ for year for which he is providing certificate of banker.
Now he is claiming a loss against property of RS. 1500000-200000=1300000

Now my question is whether capping of Rs. 150000/ is applicable in this case or we can allow this loss in his salary income. Please suggest.

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14 Replies

Sanyam Jain (Blogger) (237 Points)
Replied 22 May 2013

yes .. why not ... loss from house property can be very well setoff against salary income.

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Vachaspati Dubey (Job) (47 Points)
Replied 22 May 2013

Originally posted by : Sanyam Jain
	yes .. why not ... loss from house property can be very well setoff against salary income.

Dear Shyam Jain,

My question is: Whether threshold limit for 150000/- will be applicable in this case or we can take all interest paid which is 1500000/-

Ravi Dasija (CA) (215 Points)
Replied 22 May 2013

Originally posted by : Vachaspati Dubey
	Dear All, I have one question which I am not able to understand. An employee in my company wants following deduction from his income from salary. 1. He is having a house in Noida and he lives in Noida in another house in Noida on rent. 2. He is claiming that he has rented out his property which he & his wife owns. 3. He is claiming loss against house property (lent out) based on following calculation. He is getting a rent of Rs. 200000 for year. He is paying interest Rs. 1500000/ for year for which he is providing certificate of banker. Now he is claiming a loss against property of RS. 1500000-200000=1300000 Now my question is whether capping of Rs. 150000/ is applicable in this case or we can allow this loss in his salary income. Please suggest.

Dear Mr. Dubey

The maximum interest that can be claimed under the Head Income from House Property is Rs. 1,50,000/- (not considering the amendment by finance act 2013), so even if the interest paid is Rs. 15,00,000 the maximum allowed will only be Rs. 1,50,000/-.

As far as setting off of Loss under the head house property against income from salary is concerned, it is very well allowed and can be done.

In your case the Income from House Property will be Rs. 1,40,000/- (Rent of Rs. 2,00,000 less Standard deduction of 30%) from which the Interest of Rs. 1,50,000 can be set off, so the NET loss under the head House Property will be only Rs. 10,000 and this can be set- off against the salary income.

Correct me if wrong.

Regards

Ravi Dasija

(Guest)

If the property is rented and the rent recieved is Rs 200000.

Moreover the Interest on loan is Rs 1500000

Hence as per provisions of Section 24 of ITA, interest deduction is Rs 1500000 and not Rs 150000.

Hence employee has a loss of Rs 1360000 (200000-30% of 200000 - 1500000)

You can verfiy the rent agreements, and TDS deducted.

yes, employee is eligible for set off of house propert loss from income from salary, as per the provision of Income Tax Act, Section 71.

Shudhanshu Agrawal (Business) (2570 Points)
Replied 23 May 2013

Dear Mr. Dubey,

You have mentioned that the person is having a house property in the noida and also living in noida on rent. In such a situation he will be claiming HRA exemption u/s 10(13A) as well as interest on housing loan u/s 24. I am doubtful about both the exemptions availability simultaneously in the same city i.e. noida.

Calculation provided by CA Ravi Dasija seems to be correct if both the exemptions are avilable to him because interest on housing loan is considered u/s 24(b) and it has a ceiling of Rs 1,50,000 for housing rent exemtion for one previous year.

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(Guest)

Dear Mr. Dubey, You have mentioned that the person is having a house property in the noida and also living in noida on rent. In such a situation he will be claiming HRA exemption u/s 10(13A) as well as interest on housing loan u/s 24. I am doubtful about both the exemptions availability simultaneously in the same city i.e. noida. Calculation provided by CA Ravi Dasija seems to be correct if both the exemptions are avilable to him because interest on housing loan is considered u/s 24(b) and it has a ceiling of Rs 1,50,000 for housing rent exemtion for one previous year.

Read more at: /forum/details.asp?mod_id=250163&offset=1

Dear sudhanshu, have you read any provision which make bar on claiming Section 10(13A) and Section 24 B simultaneously.

If a person is receiving rent and declaring its income as Income From house property, he is making compliance of the provisions of the law.

The matter objectable may be FRV/MRV of the house, The interest on loan(which is very high), share of husband and wife in property.

But it also has to be considered the company is not an Assessing Officer, company can not rejects the claim of assesse, if he has made the compliance of law.

Shudhanshu Agrawal (Business) (2570 Points)
Replied 23 May 2013

Refer my article on /articles/hra-housing-loan-interest-deduction-simultaneously-5955.asp

Ravi Dasija (CA) (215 Points)
Replied 23 May 2013

Originally posted by : Ashish Barthwal
	If the property is rented and the rent recieved is Rs 200000. Moreover the Interest on loan is Rs 1500000 Hence as per provisions of Section 24 of ITA, interest deduction is Rs 1500000 and not Rs 150000. Hence employee has a loss of Rs 1360000 (200000-30% of 200000 - 1500000) You can verfiy the rent agreements, and TDS deducted. yes, employee is eligible for set off of house propert loss from income from salary, as per the provision of Income Tax Act, Section 71.