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Income from House Property

13 Jul
Income from House Property

Income from House Property

Calculation for computing Income from House Property

 Income from House Property-MyBizz

Determine what your income from house property is.

The owner of a house property is taxed under the head ‘Income from House Property’ in his income tax return. Income from a property which is used for carrying on business or profession is not taxed under this head.

Steps to calculate income from house property

  1. Gross Annual Value of the property

    The gross annual value of a self-occupied house is zero. It is the rent collected for a house on rent.

  2. Less: Property Tax

    Property tax, when paid, is allowed as a deduction.

  3. Net Annual Value

    Net Annual Value = Gross Annual Value – Property Tax

  4. Less: 30% standard deduction on NAV

    A standard 30% deduction on NAV is allowed as a deduction under Section 24 of the Income Tax Act. No other expenses such as painting and repairs can be claimed as tax relief beyond the 30% cap under this section.

  5. Less: Interest on home loan

    Deduction is allowed for Interest on home loan.

  6. Income from house property

    The resulting value is your income from house property. This is taxed at the slab rate applicable to you.

  7. Loss from house property

    Since the gross annual value of a self-occupied house is zero, claiming the deduction on home loan interest will result in a loss from house property. This loss can be adjusted against income from other heads.

Learn how ‘income from house property is added to your income when you are renting the house

When a property is let out, its gross annual value is the rental value of the property. The rental value must be higher than or equal to the reasonable rent of the property determined by the municipality.

Frequently Asked Questions (FAQ’s)

Ques : What is your ‘income from house property’ when you/your family live(s) in it?

If you are using your property for residence throughout the year and it’s not let out or used for any other purpose, it is considered a self-occupied house property. The gross annual value of this property is zero. There is no income from your house property.

 

Note: Since the gross annual value of a self-occupied house is zero, claiming the deduction on home loan interest will result in a loss from house property. This loss can be adjusted against your income from other heads.

Ques :I own a house of two floors and run my business out of the Ground Floor. I live on the 1st Floor. How much will I pay in taxes?

The Ground Floor will not be taxed under “income from house property” head. It shall be taxed under Business & Profession head.The first floor will be treated as a self-occupied house property. Income from house property will be zero in this case.

Ques :A house has been self-occupied for six months and rented out for six months. What is its income?

Calculate the gross annual value of the property by finding out its reasonable rent and actual rent collected.

If Actual Rent is lower than Reasonable Rent, only because the house was vacant and not for any other reason, take actual rent collected as Gross Annual Value.

If Actual Rent is lower than Reasonable Rent because of other factors (say the tenant and the landlord are related), then take reasonable rent as GAV.

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