Incometax calculation for my own flat (given on rent) and myself staying on rent.

Dear Sir, I am staying on rent and also own a flat 9 km away which I have given on rent. Now I came to know I can show my income from rent i am earning and get benefit in interest i pay on home loan.

As I have got possession of flat i own and rented out on 1 Oct 2013...hence I will show rented income since Oct 2013 to 31 March 2014.

Query 1 - how do i calculate how much Interest of my Home loan will become Tax free? For whole year ? or for interest paid during this period (oct to march end) only? or some other calculation.

Query 2- Since I had been paying interest before possession too since dec. 2012, how can i use this part for tax benefit ?

Query 3- Which ITR i need to file ? itr-1 or ITR -2 ?

Thanks in advance Akshay Jain

asked Jul 23 '14 at 15:31 by akshay jain 114


  1. You can claim whole interest paid in the financial year.
  2. You can claim interest paid before possession year in five equal installments starting from possession year. Say, you paid 1 lakh interest before 2013-14, then you can add 20,000 interest claim into 2013-14 claim and similarly for next four years.
  3. In case you only have to show interest/income from one house property, you can file with ITR1 too. But if you are claiming HRA exemption with amount more than 5,000 for year, you will have to file using ITR-2

answered Jul 23 '14 at 15:42 by Pankaj Batra 5.2k320

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Thanks for reply Pankaj. Query no. 1 and 2 are clear to me now. As i am staying on rent and getting exempted HRA as income.. I will file ITR-2. One more query - I do have notorized (Rs. 500 stamp ) rent agreement as a proof of rented property agreement for where i stay as well as which i have rented out. Is this sufficient if any query comes in future from IT Department?
(Jul 23 '14 at 16:08) akshay jain
Ya, rent agreement is fine. Also, you would need to mention landlord PAN for HRA exemption.
(Jul 23 '14 at 16:09) Pankaj Batra
Where do i need to mention it while filing return?
(Jul 23 '14 at 16:14) akshay jain
PAN copy has to be submitted to employer along with rent receipts/agreement.
(Jul 23 '14 at 16:16) Pankaj Batra
Sir, on your first reply on Query no.2 u said - "You can claim interest paid before possession year in five equal installments starting from possession year. Say, you paid 1 lakh interest before 2013-14, then you can add 20,000 interest claim into 2013-14 claim and similarly for next four years." Suppose i am claiming 150000 for interest of home loan, does it mean the 20000 amount i will claim will be apart from this 150000, or 150000 is upper cap which includes 20000?
(Jul 24 '14 at 08:59) akshay jain
1.5 lakh would be upper limit for deduction for self occupied property. In case rental income(notional or actual) is shown on property, then there is no upper limit.
(Jul 24 '14 at 11:23) Pankaj Batra
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Asked: Jul 23 '14 at 15:31

Seen: 2,256 times

Last updated: Jul 24 '14 at 11:23