Skip to main content

Get Tax Benefit on Second House

 

 

Many people with a second non- rented property resign themselves to the fact that they have to pay income tax on the amount they have supposedly received. This amount is the higher of the municipal rates and the market rate of a similar property in the same locality.

There is a way out. According to tax experts, if you have not rented out the property and can provide sufficient proof that you tried but did not get a tenant, the taxman may give you relief.

If a person has tried to let out the house but failed to do so despite genuine efforts, he or she can claim deduction as vacancy allowance under Section 23( 1)( c) of the Income Tax Act. " To ensure that such claims are accepted, a person needs to preserve the proof of efforts made. For example, a clipping of an advertisement in a newspaper, listing details of the house on property websites, and pictures of signboard that was used to advertise

Tax experts say that income tax ( I- T) department is stringent about this deduction which has led to several litigations.

Instead of claiming the entire amount, chartered accountants suggest claiming part deduction, so that the assessing officer sees it kindly.

Divakar Vijayasarathy, co- founder of MeetUrPro. com, says calculating the deduction is complicated. A person needs to compute rent under various conditions to arrive at an annual value, which is the inherent capacity of the property to earn income. The taxpayer needs to calculate ' municipal value'. This is 12.5 times the annual property tax. The owner also needs to get the ongoing rents for the similar property in the area from brokers and arrive at ' fair rent'.

Then, there's actual rent received. In some cases, property is governed by Rent Control Act and for this the I- T department has a ' standard rent' value.

For example, a person had let out a property for four months at a monthly rent of ₹ 50,000. The fair rent is ₹ 40,000. The municipal value is ₹ 35,000 and standard value is ₹ 30,000.

To calculate the annual value, he will need to follow three steps. In step one, he will first take the higher of municipal value and fair rent. In the example, it will be ₹ 4.8 lakh (₹ 40,000 × 12). In step two, he will need to compare this with the standard rent and take the lower of the two, which will be ₹ 3.6 lakh (₹ 30,000 × 12).

Finally, he will need to check the higher of step two figure and the actual rent, which is ₹ 6 lakh (₹ 50,000 X 12). This is the annual value of the property. Based on this, the income tax department gives specific formula to calculate the deduction aperson can claim and arrive at the income from house property.

To arrive at the tax liability, the owner can deduct municipal taxes and 30 per cent standard deduction ( money spent on repair and upkeep) from the income from house property.

 
 

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

Popular posts from this blog

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Read more

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...
Read more

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...
Read more

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...
Read more

8% Government of India Bonds quick guide

For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability. What are Government of India bonds Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form onl...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now