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Property Related Tax queries

P Gupta (practice) (75 Points)

27 February 2008

Can you please answer following property related tax queries:-

1) Is it allowed to claim some amount as maintenance expenses for an apartment in tax return, without actually spending it (because of wear and tear or may be some other reasons)? If yes, how much that amount could be? Does it depend on the rent, or value of property or something else?

2) The property is in name of wife (non-working) but housing loan is on husband’s (working) name. Can wife claim tax benefits on loan interest amount (for example, she has some other income like rent)?

Thanks in advance.

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5 Replies

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 28 February 2008

The only deductions allowed are under section 24 (a) Standard 30% of annual value irrespective of actuals and (b) interest on borrowed capital. Please refer to section 24(a) To answer the other query please explain how the loan is in husband's name if the property is on wife's name?

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CA. Gurdeep Singh Chawla (C A) (7080 Points)
Replied 28 February 2008

Standard 30% of annual value irrespective of actuals

P Gupta (practice) (75 Points)
Replied 01 March 2008

Thanks a lot for replies.

However, I am not sure if I got it all right.

1) Is it allowed to claim 30% of value of apartment as maintenance charges EVERY YEAR? Isn't it too much? For example if apartment value if 10L then maintenance charges are 3L per year? In most of the cases, income (rental income) from property will be less than 30% of the value of property. So all rental income (plus some other personal income) is excluded from total taxable income.

2) Well, it is true that apartment is in name of my wife and I have taken loan on my name because she is not working and has no income. I am probably the guarantor (don’t remember how it was done) but it is the case and loan is taken from a public sector unit. But probably, it is not possible for her to get deductions for interest (received these comments from another tax advisor).

3) If apartment is rented for a monthly rent of Rs.16000/-, is the owner liable to pay any tax considering that he has no income from other sources. After deducting maintenance charges of 30% (per year) the income will become negative. If maintenance charges deduction is not applicable in case of rental income, is there any other deduction possible?

P Gupta (practice) (75 Points)
Replied 04 March 2008

Can someone help me to better understand the situation, based on the details and examples I mentioned in my last post.

Thanks in advance.

(Guest)

HI,

As the property is in your wife name,it will consider ur property as self occupied property that means you wil not get any deducton that is maintainance charge except interest on loan but here also wife will not claim deduction of loan on interest because loan is taken on husband name.