Tax saving on rental income

Sidd Samant (Manager) (29 Points)

26 June 2012  

Dear Sir,

I have a query regarding saving tax on the rental income.

Mr.X has 2 properties.

1.) Self occupied with housing loan (Interest component = 218000 and Principal = 100000)

2.) Let out with no housing loan.Rental income Rs.192000/- p.a

Questions:

1.Can Mr.X claim the remaining amount from the interest component (218000 -150000) 68000 as loss and set it off against the income of let out property? So he pays tax on (192000 -30% - 68000 )?

2.Can Mr.X make a lease agreement with his parents (senior citizens) and lease this property to them for a token amount (say 12000/- p.a) and then the parents sub-lease the apartment and earn the rental income which will not be taxable for them. So Mr.X wil have to pay tax only on Rs.12000/- ? Is this legally viable?

Are there any other way to save tax on the rental income?

Thanks for your help!