Rebate on Homeloan interest

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  1. Rakesh Shrotriya

    Rakesh Shrotriya New Member

    We have taken home loan from Bank for purchase of a flat from a builder. The property has been purchased on the name of Self (90%) & my wife(10%). The loan has been taken jointly by me & my wife. The flat has been let out on rent. The home loan is entirely being paid by me. The interest paid on home loan in the year 2015-16 is around Rs. 1 lakh. Can I claim the tax benefit on the entire interest amount?
     
  2. chatterjee

    chatterjee New Member

    Sir, I along with my wife bought a flat jointly for which we had taken a joint home loan and are claiming 50% exemption each on interest paid (under section 24). It is a self-occupied property. Recently my wife has acquired a second flat on her name solely and she has taken an individual home loan for the purchase of this property. This property is left un- occupied. My Queries:-
    a) For my wife:
    i) Does my wife need to treat this second property as "deemed rented" and claim unlimited exemption on interest paid for this and up to 2 lakhs for the first property?
    ii)Does she have to file her return in ITR 2?
    iii)How do we calculate the notional rent on the second property?
    b) For me:
    i) Can I claim full exemption of the interest paid on the first loan (ceiling of 2 Lakhs) alone as a self-occupied property and leave my wife out of this?
    ii) Am I also affected by this acquisition of this second property?
    Regards,
    S Chatterjee
     
  3. ZED

    ZED Well-Known Member

    If the first mentioned property is treated as self occupied then ,yes, this second property will have to be treated as deemed to be let out(even if not actually let out). Yes, there is no limit as to the amount of deduction on account of interest.


    It will depend upon the nature of her other income.

    [Who can and who can not use the ITR-2]
    upload_2016-6-27_12-49-19.png

    The manner of computation has to be in accordance with section 23 as per which-:

    (1) For the purposes of section 22, the annual value of any property shall be deemed to be—
    (a) the sum for which the property might reasonably be expected to let from year to year; or

    (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or

    (c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable :

    Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him.



    Therefore to determine the value you will need to compute the expected rent and this expected rent is
    Higher of Fair rent or Municipal value but restricted to standard value. I have posted an example for better understanding.


    Extracts from the income tax website
    upload_2016-6-27_12-58-13.png





    Why do that when BOTH of you can claim the limit of 2 Lakhs INDIVIDUALLY. If the TOTAL interest if for 4 Lacs then both of you can claim 2 Lacs.

    No.
     
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