I’m salaried and have income of 2.5 lakhs/year + I started receiving a rent of 4 lakhs per year?

I’m salaried and have income of 2.5 lakhs/year + I started receiving a rent of 4 lakhs per year, so how much expense can I show from my rented place so as to save all tax, currently I’m not paying any tax for my 2.5 lakh income? OR What are the expenses I can show from my rented property so as to save optimum tax?

7 Replies to “I’m salaried and have income of 2.5 lakhs/year + I started receiving a rent of 4 lakhs per year?”

  1. Rs 2.5 lac is your “Income from Salary”.
    Rs 4 lac is your “Income from House Property”, if the value is fair as per locality.
    Both incomes will add to give total income.
    Expenses deuctible are property tax paid.
    Other deduction is 30% standard deduction.

  2. Best course would be to refer Income Tax Reckoner 2008.09 and you will be guided by examples mentioned therein.
    Expenses that can be claimed should relate to business activities undertaken by a tax payer. Rental income is not a business income.
    Again what are the terms of the contract entered into by you at the time of renting the property also counts.
    Expenses such as Legal fees for documentations in respect to the property rented, stamp and registration charges, incidentals, to some extent conveyance, are permissible expenses.
    Tax laws are complicated to a lay individual and expenses if not properly claimed and if disallowed may result in additional taxes with penalties.
    Best is to take the services of a CA, who being competant in his profession wlill advice you and file your annual return, with no tension to you. Of course a small professional fee will have tobe paid but that make sense when your tax problems are made transparent.

  3. The following expenses can be deducted from your rental receipts to save tax,
    * Municipal Tax paid during the Previous year.
    * If the let out property is Residential Property and if you have taken a Housing loan. You Can Claim Interest as expenses and also the principal amount as investment under Sec 80C(Limited to Rs. 1 lacs).If it is commercial property only interest portion can be claimed as expenses.
    * 30% in your Gross Annual value(ie., GA V = Rent receipts minus municipal tax paid)

  4. as u said u hv no taxes till now so this means that u are getting ur salary in a good manner to save on income tax.

    Now before you end up paying high amount of taxes you need to see a good tax consultant bcoz all the tax planning need to be done during the year and not after the year ends.

    For the expenses you can claim the interest paid during the year on the loan taken for the purchase of the property.

    and the municipal taxes + 30% adhoc deduction from 4 lacs

    For more contact me at [email protected]

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