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Co-ownership – Sec 26

U.C Date : 25 Feb 2015

Meaning of Co-owner – When the property is owned by two or more person, they are known as co-owners.

Taxability

  1. If their respective shares are definite and ascertainable then the income from House Property shall be calculated as per the general provision and then apportioned amongst each co-owner as per their definite share. However, deduction u/s 24b for interest shall allowed separately if the house property is self occupied by each of the co-owner.
  2. If the share of each person is not ascertainable then the Income shall be assessed as Association of Persons.

Case 1 – Where house property is owned by co-owner and self occupied by each of co-owner

Where the house property owned by the co-owners is self occupied by each of the co-owner, the annual value of the such property for each of such of co-owner shall be nil and each of the co-owner shall be entitled to the deduction of Rs. 30,000/ 1,50,000 under Sec 24(b) on account of interest on borrowed money.

Case 2 – Where house property is owned by co-owner and entire or part of the property is let out

The income from such property or part thereof shall be first computed as if this property or part thereof is owned by one owner and thereafter the income so computed shall be apportioned amongst each co-owner as per their definite share.

Bare Act for Sec 26

Bare Act for Sec 26

Where property consisting of buildings or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such person in the income from the property as computed in accordance with sections 22 to 25 shall be included in his total income.

[Explanation.—For the purposes of this section, in applying the provisions of sub-section (2) of section 23 for computing the share of each such person as is referred to in this section, such share shall be computed, as if each such person is individually entitled to the relief provided in that sub-section.]

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