Tax sops for 3 home loans too

QI own two 3BHK apartments on the same floor. I have already cleared the home loan on one of them, while I am still paying EMI of `30,000 for the second apartment. I have following scenarios to understand my tax implications: (1) What would be the benefit if I merge them to make bigger space? Can I claim them as a single unit and avail benefit of `2 lakh, or these would be treated as two units, in which case I need to show nominal rent on one of them. (2) What happens if I construct another house and move there? Can I claim net income loss on one apartment and the new house, while continue to claim `2 lakh benefit on another flat? I read many articles about the benefit of second home loan, but not clear on the third home loan. Please advice what the best option is since my tax comes to `3.5 lakh per annum.

PRASHANTH

New Delhi

A) If two or more than two houses are in occupation of the owner for the purposes of his own residence, then the annual value under Section 23(2) will be taken as ‘nil’ only in respect of any one house of his choice. The annual value of the remaining house or houses used for self-occupation by the owner will be computed under Section 23(1) as if the said house/houses were let out. In my opinion, there will be no problem in case both the houses are merged into a single unit for your self-occupation. You can continue to claim the benefit of interest subject to the ceiling of `2 lakh. In case you happen to be owner of more than two houses, you will still be eligible to claim the deduction towards interest on housing loan, in case the house is let out, or deemed to have been let out. This is in addition to the mandatory deduction of 30 per cent towards repairs on the net annual value of the house.

QEVEN IF YOU HAPPEN TO BE OWNER OF MORE THAN TWO HOUSES, YOU WILL STILL BE ELIGIBLE TO CLAIM ALL DEDUCTIONS ON HOME LOAN

I am a government employee. Recently my father-in-law divided his property amongst his son and daughters. In the process, my wife got `25 lakh as her share. Should this amount be intimated to the incometax department and what will be tax liability, presuming she has no other income? We are planning to invest the amount in fixed deposits and securities which will fetch some interest and dividend. Can my wife file a return separately?

SHAILESH Via email A) The amount of `25 lakhs received by your wife from your father-in-law will not attract any tax liability. However, the interest income received from this investment will form a part of your wife’s income. The evidence and information relating to her share received from your father-in-law needs to be produced only if the assessing officer calls for such information. Also, it is advisable to file her return of income and show such share as gift under Section 56(2) VI of the Income-Tax Act.