I am a salaried person working in Mumbai. I bought a flat in Mumbai in FY15-16. I have two other residential properties.
1) Home-1 (Mumbai): Loan amount Rs1.50 crore. My EMI (equated monthly instalment) is Rs1.25 lakh. However, I am staying in a rented accommodation paying Rs45,000 per month as I wanted a 3BHK flat. Although I got possession on 30 May 2015, this new flat is yet to be given on rent as it will be ready by 1 October 2015. The rent expected is Rs35,000 per month.
2) Home-2 (Bengaluru): A house in Bengaluru jointly with my wife (I am the first owner). The loan amount is Rs30 lakh. EMI is Rs27,000. We received possession on 10 June 2015 but it is lying vacant.
3) Home-3 (Kochi): A house in the joint name of my brother (I am the second owner) at Kochi (Kerala), where our parents are staying. Outstanding loan is Rs12.50 lakh. EMI is Rs15,000.
All EMIs are paid by me. Until last year, I have been claiming tax-exemption on interest paid for the loan taken for home-3. The annual income of my wife and brother is less than Rs2.5 lakh each.
I am aware of the following:
1) I can claim full interest, net of rent received of home-1, that’s about Rs12 lakh (adjusted 30% maintenance and property tax deduction on rent received).
2) Claim HRA for Rs45,000 rent paid.
My queries are:
Can I claim interest exemption on home-2 and home-3? If yes, what is the amount? For the home-1 and home-2, in FY15-16, I paid stamp duty and registration of Rs7,30,000 (Rs7 lakh+Rs30,000) and Rs2,00,000 (Rs170,000+Rs30,000), respectively. Can I claim this amount as loss from house property?
Ameya Kunte’s Reply:
1) Of the three houses, a taxpayer can treat one house as ‘self-occupied property’. In such case, the limit on the home loan interest deduction is Rs2 lakh per annum (pa). For the other two houses, the taxpayer needs to show that the house was deemed to be let out in the tax returns. In other words, a hypothetical income (fair rent) needs to be shown as ‘income from house property’ and, against such house, full interest deduction is available (without the restriction of Rs2 lakh).
Interest on home-2 and home-3 can be claimed as deduction in entirety, but a fair rent from these houses first needs to be added to your income. Since you are a salaried person, you can also report details of income and interest on home-2 and home-3 to your employer which shall be then considered for TDS on salary.
2) The stamp duty and registration charges paid on purchase of the new houses will be allowed as deduction under Section 80C (from the gross total income). The stamp duty and registration charges are now allowed as deduction in computing income from house property. Considering the quantum of Rs7.3 lakh, the entire amount can be adjusted towards Section 80C deduction limit of Rs2 lakh per annum.
3) Kindly note that for home-2 and home-3, it is necessary to specify your share of the property; the income and deduction shall be considered only to the extent of your specific share in the property.