Section I: Income Tax and Your House

• Ques: Ownership and possession is must to claim interest deduction
• Ans: Key points:
  • You have to report income/loss from house property ONLY if you are the owner of that property.
  • An owner is a person who owns the legal title of the property and has the right to receive income from this property.
  • Solely Owned Property: If you are the sole owner of the property, then you should report the entire income/loss from the house property in your income-tax return.
  • Jointly Owned Property: A property which has more than one owner is a jointly owned property. The owners are called co-owners and their share in the property is generally documented in the registry. Depending on the share, co-owners should report the income from house property separately in their returns. Suppose you own 30% of a property. Then you should report 30% of the income in your return. In case of jointly-owned self-occupied property, both you and the other owner can separately claim interest deduction up to Rs. 1.5 lakh in your respective income-tax returns.
  • What if you own the property, but not the land: To be considered an owner, you need not own the land on which the property is built. For e.g., you can be the owner of a shop in the mall, but may not own the actual land on which the shop is built.
  • Power of Attorney: If you are entitled to exercise all rights in relation to the property, such as selling and letting out of the property, then you are the owner of the property. Even if you have power of attorney, and have complete rights in the property, you are considered the owner of the property.
  • If you build house/floor on the existing house owned by someone else (say your father), then you can not claim any deduction.