Income tax benefit for let out property?



Hi
My wife and myself working in same city. We are staying in a house which is on my name and I have taken housing loan for this property. I am paying more than 1.5 L per year towards housing loan interest.
Q.Can I take rent from wife and show that rental income and claim the income tax benefit under the let out property?
Jerry

Income tax benefit for let out property?
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2 Replies to “Income tax benefit for let out property?”

  1. hi

    Income from house property – the issues you have raised are as follows –

    1. If it is self occupied (not given on rent) you shall be allowed deduction of actual interest on housing loan against that property not exceeding Rs.1, 50,000 per year.

    2. If it is let out (given on rent to any one including spouse) you shall be allowed deduction of actual interest on housing loan against that property even if it exceeds Rs.1, 50,000 per year. Besides that, you are also allowed municipal tax (Property Tax) in full; 30% by way of standard rebate for repairs (weather any expense actually incurred or not)

    This may be understood with an example as follows :

    Annual rent Rs.3,60,000
    Property Tax paid Rs. 20,000
    Net Rs.3,40,000

    Less :
    Repair 30% Rs, 1,02,000
    Interest on housing loan Rs.2,10,000
    Total deductions Rs.3,12,000

    Taxable Income from House property Rs. 28,000

    You may also like to refer to FAQ on house property income

    http://www.incometaxbangalore.org/faq/houseproperty.htm

    Hope it answers your Question.

    Good luck.


  2. I am not sure if you can reside in the same house with your wife and still collect rent from her. If that is legal.

    But from the example given by brijgupta, you can see that your Income from HP becomes +ve instead of -ve. i.e instead of a loss you incur profit. You have not considered the effect of declaring the rental income.

    How is that beneficial?

    HMT





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