Consider following scenario.
Mr. A owns a flat and it is self occupied by him. He also co-owns another flat with Mr. B and it is self occupied by Mr. B.
How will the tax implications be in this case if a home loan is taken for second flat where both Mr. A and Mr. B are co-borrowers and co-owners ?
1. Will Mr. A get tax benefits on home loan for second flat as self occupied flat (50% of total interest in a year being a co-borrower with Rs. 2 lakh cap)?
2. Will the 50% of a second flat be considered as let out and accordingly 50% of interest (with NO cap) will be available for tax benefit ? If yes, should the deemed rental income needs to be shown for the 50% of a second flat ?
DA-1) How can Mr.A get tax benefits as SELF OCCUPIED PROPERTY? For him this is second property.
2) Second property Mr.A is let out property. So accordingly the tax benefits applies to him. Yes, rental income must be shown for second property (even if it is vacant, in that case it is called realised income).
Mr. B is a co-owner (50%) of the second flat and self occupying it.
1. So will Mr. A have to show 50% of deemed rental income as realized income on the second flat although flat is occupied by Mr. B ?
2. Will Mr. B get the tax benefits as per self occupied property ?