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Tax on two self occupied home loan

ash (eng) (35 Points)

21 April 2013

Hi,

I have one home loan for property in Mumbai where my parents are staying. I am paying 30,000 interest on this loan and claiming tax benefit on principal as well as interest.

Now, I am buying another house in Bangalore for self occupation. Its home loan interest is more than 1.5 lacs.

None of the above properties are on rent but are occupied by me and my parents.

Could I show my Bangalore home as let out property to my wife and claim tax benefit on interest? My wife is house wife.

If not, please suggest some other alternative.

Any help will be greatly appreciated.

Thanks,

Ashish

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9 Replies

Neha sharma (-) (1257 Points)
Replied 21 April 2013

For the purpose of computing tax deduction on home loan, if the assessee has 2 house properties, it is at the discretion of the assessee to choose any 1 property as self occupied and 1 property as deemed let out....

The Assessee can show any property as let out and any property as self occupied... for self occupied property - the deduction allowed is max Rs. 1,50,000 and for let out property there is no max limit...

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ash (eng) (35 Points)
Replied 21 April 2013

Thanks Neha for reply.

Can I declare my Bangalore house as let out property and say that it is rented to my wife? If I am asked further details by Income Tax authority would they accept a rental agreement between me and my wife as proof?

Thanks,

Ashish

Ayushi Agarwal (Article) (161 Points)
Replied 21 April 2013

Yes...you can collect rent from your wife.....

nagarajan (Accountant) (191 Points)
Replied 22 April 2013

your wife is a house wife, so she has no income to pay the rent. Therefore, first create the regular income in your wife's name and then collect the rent from your wife.

Ramanuj (Accountant.) (834 Points)
Replied 22 April 2013

Dear all

I think how can given a husband rent own property to own wife. & rent received. one property has self occupied then live both. please advice.

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Kishore Dichwalkar (PRACTICING CHARTERED ACCOUNTANT) (45 Points)
Replied 22 April 2013

There is no need of giving that Bangalore House Property on Rent. Since the assessee owns two house properties for his own residence, as per the provisions of the Act, he can select any one of those two as self occupied and the other house property will be treated as Deemed to be Let Out Property. In case of Deemed to be let out Property, income from House Property is required to be Computed as if it is given on Rent.