1. What kind of income
is taxed under the head "Income from House Property"?
Rent and other income from any flat, building or land appurtenant thereto is taxed
under head "Income from House Property".
2. Is vacant land chargeable
under the head "Income from House Property"?
House property does not include vacant land. Income derived from a vacant land
is charged either under head “ Business or profession” or under the head “ Income
from other sources”?
3. Is property occupied
for business or profession also chargeable under the head "Income from House Property"?
No, property occupied for business or profession is not chargeable under the head
"Income from House Property". It is chargeable under the head “Income from Business
or profession”.
4.What happens in case
a person owns more than one residential house property?
If a person happens to be owner of more than one house property for own residential
purposes then only one house (as per your choice and it is also not necessary that
you are residing in that house) can be treated as self occupied and the Annual Value
of such property be taken as nil, all other houses shall be deemed to be let out
and Annual Value shall be computed accordingly. Further more, in a case where the
house property cannot actually be occupied by the owner due to his employment, business
or profession carried on at other place and he resides at that other place in a
building not belonging to him, the annual value of such house shall be taken to
be nil subject to the following conditions:
(i). That the property must not have been let out to others, and
(ii). No benefits have been derived by the owner.
5. What are the tax benefits
for a self occupied property?
Interest on borrowed capital for purchase of residential house property upto a limit
of 1,50,000/- p.a. can be set off against income from any other source viz. salary,
business or profession, income from any other source. This benefit is available
even with respect to a single house property which is self occupied by the owner.
Further repayment of loan upto a limit of Rs. 1,00,000/- p.a qualifies for deduction
under section 80C of the income tax act
6.Is there any tax benefit
available for investment in a new house property?
There are tax exemption benefit with respect to capital gain, arising from the transfer
of residential house property or capital gains arising on transfer of a long term
capital asset other than a house property, if the capital gain or consideration
is reinvested in purchase of a new residential house property.
7.What are the benefits
of Capital Gain arising from the transfer of residential house property?
Capital gain arising from the transfer of a house property is exempt from tax provided
the following conditions are satisfied:
- "The house property is a residential house whose income is taxable under the head
"Income from house property" and the transferred by an individual or a Hindu Undivided
Family.
- "The house property (may be self occupied or let out is a long term
capital asset (i.e it must be held for a period of more than 36 months before sale
or transfer)
- "The assessee has purchased a residential house within a period
of one year before the transfer (or within 2 years after the date of transfer) or
has constructed a residential house property within a period of three years after
the date of transfer.
- "The house property so purchased or constructed has not
been transferred within a period of three years from the date of purchase or construction.
Amount of Deduction:
If the amount of the capital gain is less than the cost of the new house property,
the entire amount of capital gain is exempt from tax. On the other hand, if the
amount of capital gains is greater than the cost of the new house property, the
difference between the amount of capital gains and the cost of the new house is
chargeable to tax as capital gains.
8.What are the benefits
of Capital gains on transfer of a long term capital asset other than a house property?
Exemption under section 54F is available if the following conditions are satisfied
:
- The assessee is an individual or a Hindu Undivided Family.
- The asset transferred
is any long-term capital asset but other than a residential house.
- The assessee has purchased a residential house within one year before the date of
transfer or 2 years after the date of transfer or constructed within 3 years after
the date of transfer.
- The assessee should not sell or transfer the new house
within 3 years of its purchase or construction.
- The assessee should not own
on the date of transfer of the original asset more than one residential house. He
should also not purchase within a period of two years after such date or construct
within a period of 3 years after such date any residential house.
Amount of Deduction:
If the above conditions are satisfied the capital
gain will be treated in a concessional manner as under :
If the cost of the new
house is not less than the net consideration in respect of the capital asset transferred
the entire capital gain arising from the transfer will be exempt from tax. If the
cost of the new house is less than the net consideration in respect of the asset
transferred the exemption form long-term capital gain will be granted proportionately
on the basis of investment of net consideration either for purchase or construction
of the residential house.
9.What are the provisions
of Wealth Tax Act and Gift Tax Act applicable to house property?
One house or a part of the house belonging to an individual or a Hindu Undivided
Family is not chargeable to Wealth Tax. Gift made after 1.10.98 do not attract levy
of gift tax either in the hands of donor or donee.
