How can i plan to reduce tax burden for the first home where my parents stay

POSTED BY dipankar ON January 2, 2015 11:58 am ONE COMMENT

Dear Manish,

I have my First property in my home town for which the loan is closed few years back and occupied by my parents(no rent received). Last year I have taken 2nd property at my work place which is under construction. When I will get it, i plan to stay in the 2nd house. Since I do not have any rental income both the cases, do i need to show rental income for the first property? Is there any way out to get a tax examption?

Please helpme with your valuable thoughts!

Thanks

Dipankar

One reply on this article “How can i plan to reduce tax burden for the first home where my parents stay”

  1. Adarsh says:

    As per provision of income tax. if an individual has more than one property then one of the property out of assesse option will be regarded as let out property.
    and assesse has to show income under the head income from House property for that property.
    However in your case since u are not received any rent from your parents , you have to show notional rent.
    Further assesse will be eligible for deduction under section 24(a) @ 30% of net annual value and also you can avail deduction for municipal taxes paid if any.

    what is notional rent?
    Answer:-
    As per Sec. 23(1)(a) the annual value of any property shall be the sum for which the property might reasonably be expected to be let out from year-to-year. In determining the annual value there are four factors which are normally taken into consideration. These are: i) Actual rent received or receivable, ii) Municipal value, iii) Fair rent of the property, iv) Standard rent.

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