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Income from house property



Income from house property - Most of the people in today's time are earning income even by renting out their house property. But rental income earned from your property is also taxed and you need to show it in your income tax return.

According to the Income Tax Act, a person has 5 heads of earning income and one of them is the head of income from house property.

In today's article (income from house property in English), we will discuss about the taxation and other provisions of income from house property.

What is house property according to income tax? Definition of house property for income tax purpose 

According to the Income Tax Act, any building or land which is attached to that building will be treated as house property.

That is, if you let your house, office, shop or parking space on rent, then your rental income will be taxable and you will have to show this rental income in your income tax return under the head income from house property.

But, if you have given any vacant land or plot on rent, then this income will be shown in your income tax return under income from other sources.

In whose hands the income from house property will be taxable?

Income from house property will be taxable in the hands of its owner. But the question here is that who will be considered the owner of the house property according to income tax.

According to the Income Tax Act, the deemed owner of the house property –
If an individual transfers any of his house property to his spouse or his minor child (other than a married daughter) without consideration, in this case he shall be deemed to be the owner of that house property for the purpose of levying income tax on the individual,
holder of any impartible asset,
A member of a co-operative society, company or other Association of Persons (AOP) to whom any building or any part thereof has been alloted or given on lease. Here that member will be considered as the owner,
power of attorney or has been given on lease to any property for a period exceeding 12 years, such person shall be deemed to be the owner of that property in accordance with the Income Tax Act.

How to calculate the income of let-out house property?

After finding out the owner of any house property, that owner should calculate the rental income from his house property according to income tax.

Calculation of income from a let out house property –

Gross annual value***
Less : Municipal taxes***
Net annual value***
Less : Deduction under section 24
1.       Standard Deduction***
2.       Interest on borrowed capital***
Income from house property***

In this way, after deducting the income of house property, this income is added to the total income of the individual. Where it will be taxed according to the slab rate of income tax.

Which type of income tax deduction is given from income from house property? deduction under section 24 –


After deducting the gross annual value of the house property, income tax deduction is allowed after paying municipal tax out of it.

Section 24 deals with the deduction to be given from the income from house property.
The deduction from house property income is –
  1. Standard Deduction – house property a net annual value a 30 % ,
  2. Interest on Borrowed Capital – Waiver of interest on loan taken for purchase, construction, repair, renewal or reconstruction of any house property.
Note :
  • No deduction will be given for house property insurance, ground rent, land revenue, repairs, collection charges, electricity, water supply, liftman salary or any other expenses.
  • Loan interest will be waived on accrual basis. That is, even if the interest is not paid, a discount will be given.
  • There will be no exemption of commission or brokerage paid for availing the loan.
  • Interest on the new loan taken to repay the home loan will also be waived.

What is the maximum exemption of interest on home loan?

In the Income Tax Act, the maximum exemption of interest on home loan from the income of house property has been given in 2 types – (1) 200000 (2) 30000.

The maximum exemption of Rs 2 lakh will be given when the following conditions are fulfilled –
  1. Home loan taken after 1st April 1999
  2. This loan should be in respect of purchase of property or construction of property.
  3. The purchase or construction of the property must be completed within 5 years from the end of the financial year availing the loan,
  4. The person taking the loan can certify the interest to be paid on the loan.
If these 4 conditions are met, then the maximum interest of the home loan can be availed up to a maximum of Rs 2 lakh. And if a joint home loan is taken then the maximum exemption of 2 lakhs will be available per person.

Note – If the house property is let out, then the entire home loan interest can be claimed, but if the house property is used for self-sustainability, then maximum home loan interest exemption of 2 lakhs can be claimed .

If the above-mentioned conditions are not fulfilled, then only a maximum deduction of 30 thousand will be given on the interest of the home loan.

How will the income of house property used for own living be calculated?

Before calculating the income of any house property, its gross annual value is calculated for the whole year.

Such a house property which is used by a person for his own purposes is called self-occupied property according to the Income Tax Act. And the gross annual value of these self occupied properties is always considered as nil.

But any house property will be deemed to be self occupied property when it fulfills two conditions –
  1. no part of that property has been let out at any time in that year, and
  2. That person should not be getting any kind of benefit from his property.

If both these conditions are fulfilled then that property will be considered as self occupied property and its gross annual value will be considered as nil.

Apart from this, if a person is not able to live in his property due to any reason, then that property will also be considered as self occupied house property, if some condition is fulfilled –
  • That person is not able to employ him because of his job or business or any other place of profession,
  • He should not have his own house property in the place where he is staying,
  • Have not let out your property at any point of time during the whole year,
  • No other benefits are accruing from that property.

If this condition is not met, that property will be considered a let out property.

computation of income of self occupied house property –

Gross annual valueNil
Less : Municipal taxesNil
Net annual valueNil
Less : Deduction under section 24
1.       Standard DeductionNil
2.       Interest on borrowed capitalAmount
Income from house property***

In this way if there is any home loan interest then there will always be loss in self occupied house property. You can set off this loss from other profit.