SANJEEV KUMAR (Finance professional) (227 Points)
04 March 2013Sir,
A person having two flats. In one flat he is residing and other flat is vacant. For computing income tax, whether he has to show notional income form second flat and if that then how much amount he has to take. or whether he can take zero income from second flat for income calculation purpose.
Thanks and regards
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 04 March 2013
If a person is owning more than 2 flats, then he can show one flat of his choice as Self-occupied and the other one shud be shown as deemed to be let out flat.
for this DLO flat the has to show notional rent as received from the property. however you would get deduction of municipal taxes paid from the rental income. on the balance you would get 30% std deduction for expenses incurred for maintaining the property. If there's a home lona taken then you take the full benefit of teh interest paid on home loan. If teh interst paid exceeds the rental income then you can claim teh loss from your taxable income.
CA.D.RAGAVAN
(CHARTERED ACCOUNTANTS)
(219 Points)
Replied 04 March 2013
The Income Assessed for the purpose of Property Tax by the Municipal/Corporation Authorities has to be adopted. You Can Claim Vacany Allowance u/s.23
Santosh Mishra
(AM)
(1135 Points)
Replied 04 March 2013
Second property would be treated as deemed let out property and income has to be computed on a notional basis. As the property is not actually let out, person needs to take fair rent of the house as Gross annual value.
Income tax department has not provided any concrete method to arrive at Fair rent but it is defined as the “rent which similar property in the same locality would fetch”. So you can declare any amount but you should be able to justify it at the time of scrutiny, if any.
Another option is to consider the value determined by municipal authority to calculate house tax.
Santosh Mishra
(AM)
(1135 Points)
Replied 04 March 2013
Dear Mr. Ragavan,
I agree with you.
Could you please also enlighten me how to get the income assessed for property tax by municipal authority? Are these assessed income mentioned on bills? or if there are any websites.
CA.D.RAGAVAN
(CHARTERED ACCOUNTANTS)
(219 Points)
Replied 04 March 2013
Normally, in any Municipal Corporation or Municipality, the Tax Levi is about 8.33% per Half Year 16.67% for Whole Year. So You Can Take the Tax Paid Value at 10% and 10 times of the Municipal Tax Paid is Fair Rent Fixed by the Municipal Authorities. At any enventuality the Fair Rent Declared can not go below the Rent Fixed by the Municipal Authorities.
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