02 May, 2013 09:11 PM

Tax matters for more than one property

1. Second home is let out on rent: In this situation, rent received from the property will be taxed.

2. Second home is occupied by individual for residence or his family: In this situation, the owner will have the option to select any one property as being used for self-occupation. The other property will be treated as 'deemed to be let out' and the estimated annual rent will be considered as taxable.

3. Second home remains vacant: In case the second home remains vacant, the house will be treated as 'deemed to be let out' and the estimated annual rent will be considered as the taxable value.

4. Second home is used as a holiday home: As the benefit of self-occupied property is available for only one home, the estimated annual rent will be considered as the taxable value.

Deductions

Municipal taxes paid: The Income-Tax Act 1961 provides a deduction for the municipal taxes paid during the financial year. However, it is pertinent to note that the deduction is available only if the municipal taxes have been paid in the current year.

A flat standard deduction: The Act also provides a flat standard deduction of 30% from the annual value. This deduction is allowed on a notional basis for expenses incurred such as repairs and maintenance of house property, insurance, etc. This deduction is irrespective of the level of actual expenditure.

Interest on housing loan: If a loan is taken for purchasing the house property, interest on the loan can be claimed as a deduction. "This deduction is available irrespective of whether the second property is let out or occupied by the individual. In respect of the let out property, the actual interest paid will be available as deduction, whereas the amount of deduction is restricted to Rs 150,000 where the property is occupied by the individual," says Agarwal.