REPLY :  

Rule 4 of the Income-tax Rules provides that unrealised rent is deductible from income if such rent is proved to be lost and irrecoverable provided the tenancy is bona fide and the defaulting tenant has either vacated the property or steps have been taken to compel him to vacate the property.

REPLY :  

A. You have not mentioned whether the flats would be let out or kept vacant. Assuming flat owned by you is kept vacant but the one owned by your wife is let out, the taxability is discussed as under:

Flat owned by you:

It has been provided u/s 23(3) that the annual value would be taken as NIL if following conditions are fulfilled:

• The asseessee owns only one house property, which is meant for his own residence.
• The asseessee can not occupy the house property because of his employment/business  profession away from the place where the property is located.
•  The property is not let out and no benefit is derived from it

Though you shall not be entitled to claim deductions under section 24 on account of repairs/ insurance/ annual charge, etc, yet you can claim deduction upto Rs. 1,00,000 p.a. on account of interest on amount borrowed for purchase of the flat. Since the annual value would be NIL, there would be a loss under this head which can be adjusted against other incomes thereby reducing overall tax liability.

Flat owned by your wife:.

Your wife is eligible to claim deduction of interest paid on borrowed sums with out any limits. She would also be entitled to deductions under section 24 towards insurance premium, annual charge, repairs etc. However sum total of all these deductions including interest cannot exceeds the annual value.

REPLY :  

Your friend is right. It is irony of the tax laws, that sometimes we have to pay tax on notional incomes, even if not actually earned. However, section 23(2) allows you to choose any one of your houses as self-occupied, the annual value of which would be taken as nil. Income from other house would be taken on notional basis, as if it is let out. You should calculate house property income of both the houses and opt one with higher income as self occupied.

REPLY :  

You became owner of the "rights to property" in the year 1992, which is being sold now. In my opinion this would result into long-term capital loss as the "right" is sold after three years. This capital loss can be used to offset any other long-term capital gain earned by you in the same year. The balance if any can be carried forward for eight assessment years and shall be set off against income under the head Capital Gains.