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Self occupied house property loss carry forward and set off

Gagan (ba) (30 Points)

21 July 2019

The loss on self-occupied property is capped to 2lacs. Any excess interest payment can be carried forward to next 8-years. Let's say in the coming years if the interest component falls below 2lacs, can losses carried forward be added to make interest deduction to 2 lacs.

ex. total interest paid first year: 2.4 lacs. 2 lacs claimed as interest 40k carried forward.

2nd year interest paid is 1.7 lacs. can 30k from previous year be added to make total exemption 2 lacs and remainder 10k again carried forward?

asumming the rax payer has only one house (self occupied) and earning is only from salaray?

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6 Replies

Suresh Thiyagarajan (Student) (3986 Points)
Replied 21 July 2019

1. As per sec 71 loss under the head income from house property will be allowed to be set off against any income in the same AY to the extent of Rs. 2 lakhs.
2. Sec 71B deals with set off and carry forward of losses. It allows the assessee to carry forward the loss arising under this head, if it could not be wholly set off in the same AY, to the extent of the unadjusted amount it can be carry forwarded for 8 AY succeeding the AY in which the loss was incurred.
3. In your case Rs. 40,000 loss under the head IHP was carried forward for next year. Sec 71B clearly states the loss which is carry forwarded can only be set off against income from house property in the subsequent years. In other words, loss under the head IHP only in the year of loss it can be adjusted against any other head, the carry forwarded loss cannot be adjusted under any heads of income in the subsequent years.
4. Since you have a self-occupied property you may not have income charged under the head IHP, hence the loss carry forwarded to the extent of Rs. 40,000 cannot be set it off against salary income. Only Rs. 1.7 lakhs can be set it off and Rs.40,000 will need to be carry forwarded.
Please correct me if the above solution has an alternative view.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 21 July 2019

Yes. That is correct interpretation.

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Gagan (ba) (30 Points)
Replied 21 July 2019

the two answers are conflicting in nature and hence i needed clarification with the understanding. can the carried forward losses be added to interest component of home loan , if the exemption limit falls below 2lacs? still confused

Suresh Thiyagarajan (Student) (3986 Points)
Replied 21 July 2019

No, you cannot. There is no interest component once the loss was carried forward for subsequent years. There is only House property loss and that loss cannot be set it off against any income other than income from house property in the subsequent years.

Suresh Thiyagarajan (Student) (3986 Points)
Replied 21 July 2019

Thank you, Sir.

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Neeti Mohab (13 Points)
Replied 22 July 2019

Originally posted by : Suresh Thiyagarajan
	1. As per sec 71 loss under the head income from house property will be allowed to be set off against any income in the same AY to the extent of Rs. 2 lakhs. 2. Sec 71B deals with set off and carry forward of losses. It allows the assessee to carry forward the loss arising under this head, if it could not be wholly set off in the same AY, to the extent of the unadjusted amount it can be carry forwarded for 8 AY succeeding the AY in which the loss was incurred. 3. In your case Rs. 40,000 loss under the head IHP was carried forward for next year. Sec 71B clearly states the loss which is carry forwarded can only be set off against income from house property in the subsequent years. In other words, loss under the head IHP only in the year of loss it can be adjusted against any other head, the carry forwarded loss cannot be adjusted under any heads of income in the subsequent years. 4. Since you have a self-occupied property you may not have income charged under the head IHP, hence the loss carry forwarded to the extent of Rs. 40,000 cannot be set it off against salary income. Only Rs. 1.7 lakhs can be set it off and Rs.40,000 will need to be carry forwarded. Please correct me if the above solution has an alternative view.