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POSTED BY ON May 15, 2012 1:56 am COMMENTS (4)
Before writing my query, let me assure that I have made use of lots of other questions in the forum and several of their responses. I still have a few queries left hence this question:
I am staying in a house jointly owned by self and spouse. Recently bought a second house in same apartment with my spouse co-borrower for 22Lacs home loan and co-owner of the house (she is a housewife). For first 3 months, we paid pre-EMI as bank held the partial amount till we submit the mutation paper. However rental income began right from first month itself and since the rent agreement is in my wife’s name, that income goes to my spouse’s account whereas EMI is being paid from my account. Now my questions are:
1. Anything wrong in this arrangement?
2. From other questions in the forum I learned that I can claim income deduction for loan interest without the top ceiling of 1.5L and principle upto 20K under 80C. However I need to show rental amount as my income which actually is getting credited to my spouse’s account. How can I appropriately present this?
3. Since my spouse is a housewife, I think I can claim the full amount of principal and interest for tax rebate.
4. Since this amount involves calculation of rent income, standard deduction and house tax as well, can I not have it adjusted against TDS from my employer instead of filing a refund later?
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The second home will be a let out property. You can claim deduction on all interest paid. [Not the whole EMI amount as EMI consists of both INTEREST and PRINCIPAL components].
Dear Justgrowmymoney & Ashal,
thanks a lot for your responses. I am pretty much clear of the situation now. Just a little clarification (Though I dont think it will have any bearing on your elaborations), I dont have any running loan on first house.
Secondly in the calculation above, EMI being 22000, total repayment is 232K. However it is mentioned as interest paid. Just to double confirm, income from house is adjusted against the total loan repayment or only the interest part of it.
Regards
Sachin
Dear Sachin, as your spouse is not working & probably no source of income also, I assume all the funds apart from home loan are pitched in by you & the name of spouse in both houses is for merely practical purpose that due to joint ownership later on if one person is no more another can sell the house easily in case of need.
House A you are already claiming self occupied related tax benefit from home loan.
House B, as you are the sole arranger for all the amount, you can claim full tax benefit on your home loan. From prev. discussions I do hope you have the idea of how to calculate the benefit after considering the rental income. If not please intimate & you ‘ll get the answer.
Thanks
Ashal
1) Regardless of who signed the rental agreement and whose account gets the rent the rental income must be recognized by all loan holders in the proportion they pay the loan. If Person A and B contribute 60:40 for the EMI then the rental income must be shared as 60:40. In you case EMI and Rental income will be 100:0 and 100:0 ===> The entire rental income is yours. You need to add that to your income and pay tax.
2) Claim all interest paid and show all rental in your tax. Thats all.
3) NA
4) If your employer agrees well and good.
Assume: EMI = 22000 and 20k is interest for this year.
Interest paid = 21k*12 = 232k
Rental income = 10k*12 = 120k. Take deduction of 30% => Income 84k
Taxes = 5000.
Income from house = 84k-(232k+5k) = -153k. Declare this to the employer.