I have a question for those who have insight into taxes.
I have a house purchased in distant place for which I pay EMI to a bank. I have claimed interest rebate of 1.5lc and principal rebate of 1lc in my previous year taxes. This house is currently lying vacant.
Recently I purchased a house in a city where I work, where my spouse is co-applicant on loan and also co-owner. We pay EMI on this house too and also we are currently residing in this house. EMI for this house is much bigger than the other one.
I know that although on second house I can't claim principal rebate; the interest is unlimited as long as I show the rental income.
My question is:
1. Is it ok to show the house is distant town as the residential property. And claim principal and interest on that house?
2. Show the current actual residential property as my second house and not claim any principal rebate on it but instead show the notional income and claim the benefit of unlimited interest in it?
3. Given that it's co-owned by my wife, do I have to keep a split in mind?
4. What is the best way to plan my taxes with this situation; if this is not correct way to claim my taxes?
Any help is much appreciated. Thanks for your help!