Business   

Deduction meant for property income is available only to the owner

My son as first applicant and myself as co-applicant have availed ourselves of HB Loan of Rs. 10 lakh from HDFC for purchasing an apartment in September 2006. The property is self-occupied in November 2006. My son has gone for further studies to the U.S. for two years.

I am a taxpayer with gross salary of around Rs. 3.50 lakh. At present, I am not claiming any rebate on HB Loan repayment.

My questions are: (1) can I, as co-applicant, claim rebate for interest portion of Rs. 40,000 and principal amount of Rs. 18,000 in the income-tax return for the year 2006-07 (assessment year 2007-08) and (2) We have paid Rs. 15,000 as registration charge and Rs. 1.22 lakh as stamp duty and Rs. 4,500 as property tax for the year 2006-07. Can I claim rebate on these amounts.

The property was registered on October 2006 (if so under what head). Please clarify my son is not going to claim tax rebate for this now.

It is understood from the above letter, that the property was purchased by the son out of his resources availing bank loan, which he is presumably discharging. The mere fact, that the reader is a co-applicant for the housing loan does not entitle him to claim either interest or the property tax against his income. It is the son, who is assessable on the property income, though there may be no liability for the reason that his income falls below the taxable limit or because the property being self-occupied is not liable to tax. Merely because the son is not claiming the same in such circumstances, the father does not become entitled under the law to claim such deductions from his income, which is taxable in the hands of the owner, who alone is entitled to deductions meant for property income. Even if the reader returns the loan out of his pocket, he will not be eligible for deduction, as he is not the owner of the property. Incidentally, stamp duty and registration charges are not deductible in law.

S. RAJARATNAM

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

A WTO perspective of Indian economy
Merchandise exports: keeping up the momentum
Renewed focus on power and agriculture
Deduction meant for property income is available only to the owner

Copyright © 2007, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu