Property hereby refers to any building (house, office building, godown, factory, hall, shop, auditorium, etc.) and/or any land attached to the building (e.g. Compound, garage, garden, car parking space, playground, gymkhana, etc.).
This is the only head of income, which taxes notional income (except under some circumstances under capital gains, income from other sources). The taxability may not necessarily be of actual rent or income received but the potential income, which the property is capable of yielding.
Hence, its important to plan for reducing tax liability from income from property. You can minimize your tax out go in the following cases:-
Owing more than one property
If you own more than one property, then only one house of your choice will be considered as self-occupied and others will be considered as let out or Deemed to be let out (if not let out). Therefore, you should carefully evaluate and choose a property with less tax liability.
Illustration: If Shiva has income from House 1 of Rs 49,000 and House 2 as Rs 2,02,200 and he considers House 1 as Self-occupied and House 2 as deemed to be let-out then his income from house property will be Rs. 52,200 and it will be negative Rs. (1,01,00) vice-versa. Therefore, he should consider House 1 as deemed let out and House 2 as self -occupied.
Joint Home Loan
If you are a Joint owner and also apply for a joint home loan then both the co-borrowers can take a maximum deduction of 150000 each.
First house is in a single name and planning a second home
If your first home is in single name then you can buy a second home in your spouse's name to help you avoid tax on ‘deemed to be let-out' property.
Income from house property can be divided between both the co-owners which can reduce overall tax liability.
Your home and a meticulous planning can lighten up your tax burden to a great extent.
About the Author:
Reenika is a Certified Financial Planner and has more than 6 years of experience in the financial service industry. She can be reached at firstname.lastname@example.org