Tips n Tax Planning House Property

7. Where more than one house are occupied, only one house is treated as self-occupied & other are deemed to be let out as per Sec 23(4), deduction of Sec 24(b) is applicable to self-occupied house subject to condition of Rs.1,50,000 and for other houses actual interest will be allowed.
An assessee must consider which house is to be shown as self-occupied for claiming maximum benefit.
For e.g.: Mr. A has 2 houses which are occupied by him. For taxation purpose only one will be considered to be self-occupied and other to be let-out. For tax planning purpose he must consider that house as self-occupied that provides him maximum tax benefit i.e. if
House 1 = Rs.4,00,000 Interest on House 1 Loan = Rs.165000
House 2 = Rs.5,40,000 Interest on House 2 Loan = Rs.175000

Case 1 – House 1 self occupied
Income from house 1 = -150000

Income from house 2
NAV house 2 = 540000
Less Deduction u/s 24 (a) = 162000
Less Interest on capital 24 (b) = 175000
Income from house 2 = 203000

Income from house property = 53000
(Income house 1 + 2)

Case 2 – House 2 self occupied

Income from House 1
NAV house 1 = 400000
Less deduction u/s 24(a) = 120000
Less deduction u/s 24(b) = 165000
Income from house 1 = 115000

Income from house 2 = -150000

Income from house property = -35000
(Income house 1 + 2)

Thus it is better for Mr. A to consider House 2 as self occupied

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