ITR
Reporting a jointly owned rented property
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Facts
Where co-owners have definite shares, each is taxed on their own share of the property income. Each shows their share of rent, municipal tax and interest paid. Each also reports their share in Schedule HP with the co-owner's details.
Provisions and law
- Sec 26, Income-tax Act 1961Co-owners with definite shares are each taxed on their own share of the property income
- Sec 22 (now Sec 20)Annual value of property you own is taxed under house property
- Sec 24(b) (now Sec 22(1)(b))Deduction for interest on a home loan; ₹2,00,000 cap for self-occupied houses under the old regime
Analysis
Sec 26 of the Income-tax Act 1961 treats each co-owner separately, so with ₹6,00,000 rent you each show ₹3,00,000, less half the municipal tax and 30%. Interest is claimed by whoever pays the loan for their share. Schedule HP asks for co-owner PAN and percentage. Rent income from letting a shop is still house property income if you are not running a business of letting.
Conclusion
- Confirm ownership shares from the deed.
- Split rent, tax and interest by share.
- Enter co-owner details in Schedule HP.
- Make sure both returns match.
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Return with rent from two or more properties and home loan interest, Sec 24(b)
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