Income tax on additional flat for parents

If you can join your adjacent flat with your flat as one flat, it may be considered as one single dwelling unit. It is then a self occupied house. There is no rental income on such property.

If you cannot join your adjacent flat but it is still very nearby, it can be still considered as one single dwelling unit, but such presumption is not free from disputes and you may have to prove it so at appeal levels.

If you have taken a housing loan, you may claim interest on housing loan on such self occupied property upto Rs. 2 Lakhs. This is in respect of existing loan, if any, and the new loan you may take. However, if the interest component exceeds Rs. 2 L, it may be worthwhile for you to let out the new house to your parents and claim interest actuals without any limit. You will have to evaluate both the options and decide.

Yes one of the house of your choice can be selected as Self Occupied and the other would be liable to Tax as Deemed to be Let Out Property.

Dear Sir,

With respect to your quarry as per the legal status your annual latebale value prevailing as per local Rent Control Act shall be taxed in your personal income. However i would suggest you that in order to avoid that bu this new flat in joint name with any of your family member being their name as first holder and your name as joint holder so that there will not be any question of taxability on the same.

Thanks & Regards

CA Vishrut Shah

(+91-9824798534)

vishrut1303@gmail.com