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House Property and HRA - Interesting and Practical Scenario

150 views 7 replies

Manjul Prakash

14 Points Joined July 2017

What will be tax treatment - If a salaried person is living on rent in city X and that person also has a property in a nearby city Y (like Delhi- Gurgaon) which is currently vacant due to some interior work. The property in city Y has been purchased on loan. This property is near to his current employment place while he is living on rent at a distant place.

Can he avail all of the following - HRA for the rent paid, interest deduction u/s 24 and principal deduction under 80C, for the period when he was living on rent and property was vacant due to interior work?

Replies (7)

kumar

CA-Final

113 Points Joined March 2015

Yes he can do it....
when dept. asks for evidence he can show the rent receipts and employer - employee agreement for HRA...
This way he can claim both HRA and interest and/ or principle payments...

Manjul Prakash

14 Points Joined July 2017

ok great, Thanks! Just one last clarification - For the vacant property, the rental income will be 0 and it will not be considered deemed to be let out? Hence, the interest portion will be ultimately amount of loss from house property

kumar

CA-Final

113 Points Joined March 2015

So you are trying to say that ... such interest amount leads to Net loss from House property and thereby we can carry forward or Set off???

Manjul Prakash

14 Points Joined July 2017

Yes l, such interest is leading to loss in house property since gross annual will be 0 as it is not let out. Hence, i will set off this house property loss at gross taxable income Level.