Apartment Maintenance Fee Tax Treatment

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  1. Santosh Rao

    Santosh Rao New Member

    I have two flats/houses. One among them is self-occupied and the other is proposed to be rented out.

    As far as accounting of rental income of the second house from income tax angle, I require some clarification.

    In case the total monthly rental received by the owner from the tenant also includes maintenance charges payable to the building society towards monthly expenses for common area usage, maintenance of garden, providing security etc., whether such maintenance charges can be excluded for arriving the net taxable income. Wherever the maintenance charges are paid to the society, the cost of the internal maintenance of the flat (like painting, bathroom and kitchen maintenance) is to be borne by the owner.

    In nut shell, I propose to arrive the net taxable income as follows:

    Amount received from the tenant : …(a)
    Less maintenance charges paid to society …(b)
    Less Municipality tax …(c)
    Net Rental (after reduction of maintenance, municipal taxes).(d)
    Standard Deduction i.e. 30% on d
    Net Taxable Rental Income (d – e) …(f)

    Can you clarify on the above is fine especially in terms of treatment of maintenance.
    V Krishna and V K Khanna like this.
  2. V K Khanna

    V K Khanna Active Member

    Maintenance charges paid to the society is not an approved deduction for arriving at the net taxable income from the house property. Other deductions proposed are in order.
  3. sai tejesh(ca.final)

    sai tejesh(ca.final) Active Member

    U/S24(a),Standard deduction @ 30% is allowed from net annual value.
    It means that irrespective of actual expenditure incurred on house property,this deduction can be claimed from property income.
    So all maintenance charges,repairs etc incured on property is deemed to be included on that standard deduction of 30%
    So maintenence charges cannot be excluded while arriving the net house property income.
  4. V K Khanna

    V K Khanna Active Member

    Please see the thread carefully. You cannot have the benefit of both the deductions. If standard deduction @ 30% is allowed, you cannot seek another deduction towards society's maintenance charges( b of the illustration)
    Last edited: Apr 26, 2016
  5. Nikil Mohan

    Nikil Mohan Member

    To go by the rule book the answers given by the Hon'ble members as above is perfect. But some times, you are expected to make some tax planning and help your clients. To exclude maintenance charges from rent received is one of the easiest ways to save tax.
    Last edited: Apr 27, 2016
    V K Khanna likes this.
  6. V K Khanna

    V K Khanna Active Member

    @Nikil Mohan. I fully agree with you.

    Its a good suggestion for tax planning purposes.
  7. sai tejesh(ca.final)

    sai tejesh(ca.final) Active Member

    In continuation to Nikil Mohan's explanation,if you receive rent including monthly maintenance charges in the form of cash,then directly you can take net rent even if there is no clause in the rental agreement & if such rental income is not subjected to TDS.Otherwise total amount will be taxed in your hands as,department can easily trace that,you are receiving maintenance charges and will charge that amount in your hands.

    If you receive the rent in cheque,here TAX PLANNING has to be made.
    Every month if you receive the entire amount(rent+charges) in cheque, then there is no option even if you state in a rental agreement that,part amount goes to society from me.

    So as a conclusion request your tenant to give seperate cheques" one is to you & another one is to society".
  8. i am residing in a rented flat of apartment.I pay 22k as rent to owner and 3k as maintenance charges to society per month. Now my query is can i claim 25k as house rent paid under sec 80 GG or only 22k is admissible--manoj kumar srivastava
  9. ZED

    ZED Well-Known Member

    The way you drafted your query, it appears that there are three parties involved, namely-
    1. Owner of the house;
    2. Tenant (You);
    3. Society.
    There should also be two agreements, one with the society and the other with the proprietor (owner) of the house. If that's the case then deduction would not admissible on the account of maintenance charges.
  10. V Krishna

    V Krishna New Member

    Continuing the above question on income from house property, society charges the maintenance on apartments irrespective of occupancy. So can such payments be deductible from current or future rental income?
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