Useful tax saving tips for home owners

By | June 15, 2012

Nisha and Narain bought two houses and is paying Equated Monthly Installments (EMI) for both. She wants to know how to get maximum tax rebate on it.

However, Nisha would then have to pay tax on the rental income since the rent received will be treated as income.

Let’s assume the rental income for the apartment is Rs 100. As part of deductions before tax, 30 per cent of the income is deductible towards maintenance. This then leaves Rs 70 as the taxable income.

Ideally, in a situation like this, it is best to opt for a joint home loan. Narain and Nisha could have done the same. Since they both are salaried employees, they can club both their incomes and avail of a higher loan. The obvious advantage is the increase in loan eligibility. Banks often insist that co-owners of the property, should be co-borrowers as well. Being co-owners and repaying a joint home loan would entitle both Narain and Nisha for higher tax benefits jointly. They can avail these benefits according to the proportion of their individual shares of the loan.

YOU MAY ALSO WANT TO:  Check out these calculators to help you figure out if your investments are doing well –  Income Tax Calculator , GST Calculator
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5 thoughts on “Useful tax saving tips for home owners

  1. George

    Rent out apartment B (as opposed to apartment A).

    Whilst there is a 1.5L limit on the interest exemption for tax, this limit is applicable to self-occupied property only. There is no such limit for let-out property. i.e. if you rent out apartment B, you should be able to claim all 3.3L interest as deduction. You'd be more tax-efficient if you rent out apartment B.

    1. SANKAR N K

      There are many things which we should take in to consideration while renting out. Of course, tax benefit is one aspect. But, rental income will be just 3 to 4% of the total investment, where as the interest cost is about 9 to 12%. Unless the property is appreciated the result will be net loss. It is assumed that property prices are increasing by 12% per annum. So the net benefit will be 4% p.a. Out of this, we should meet any repair charges, property tax etc. If we are getting a good tenant there may not be much problems. Otherwise, it will not be worth to rent out.

  2. Sheena

    Please furnish the
    1. income slabs and rate for the financial year 2010-2011and also list of exempted incomes for salaried class and
    maximum limit available.
    2.The exempted gratuity limit is enhanced from MAY 2010 to ten lakhs.Please clarify what is the limit applicable for those who reitired before 24th May 2010 and amount received after that date ie after 24th May 2010.
    The above is useful for many salaried class people reitired before 24th May 2010.

    Please furnish the above particulars.


  3. ebenezer

    after retirement I sold my flat at my native place and bought another flat at the place where I got retired.I dont have any income after retirement except a meagre self contributory pension .What is my tax liability.Please advice.


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