What is 'Income from House Property' under Income Tax?
It refers to rental income earned from buildings or land attached to buildings, like a garden or parking area, owned by you.
Can commercial properties also be taxed under house property?
Yes. Even if you rent out a shop, showroom or office space, the rent can still be taxed under "Income from House Property."
Is income from vacant land also considered under house property?
No. Income from renting just land is taxed under “Income from Other Sources,” not house property.
What if I sublet a house I’m renting?
That income will be taxed under “Income from Other Sources” because you're not the owner.
When is rental income treated as business income?
If you’re running a full-fledged rental business (like running a hotel or hostel), the income is considered business income.
Do I need to be the legal owner to be taxed under this head?
Yes, or at least a "deemed owner." Only owners (or deemed owners) are taxed under “House Property.”
Who is a deemed owner?
A person who isn’t the legal owner but has control over the property, like someone who got it transferred by a spouse or under a long lease.
In which cases am I treated as a deemed owner?
- If you transfer the property to your spouse or minor child without adequate consideration.
- If you hold property that cannot be divided among legal heirs.
- If you got possession via a co-operative society or agreement.
- If you hold a lease for more than 12 years.
What types of house properties exist for tax purposes?
- Self-occupied (used for your residence)
- Let-out (given on rent)
- Deemed to be let-out (more than 2 owned houses – others are assumed rented out)
How is income from house property calculated?
The steps are:
- Calculate Gross Annual Value (GAV)
- Deduct property taxes
- Get Net Annual Value (NAV)
- Deduct 30% standard deduction
- Deduct interest on housing loan
- Result = Taxable Income
What is Gross Annual Value (GAV)?
It is the higher of:
- Expected Rent (as per municipal/fair rent)
- Actual Rent received
What if actual rent is less due to non-payment by tenant?
You can reduce GAV if:
- You have a real rental agreement
- You’ve taken legal steps to recover rent
- Tenant has vacated or has no other property of yours
Can you give a GAV calculation example?
Sure.
· Municipal Value: ₹80,000
· Fair Rent: ₹90,000
· Standard Rent: ₹75,000
· Actual Rent: ₹72,000
Expected rent = Lower of (Fair/Municipal = ₹90,000) vs Standard = ₹75,000
GAV = Higher of ₹75,000 (Expected) vs ₹72,000 (Actual) = ₹75,000
What is property tax deduction?
You can deduct municipal tax paid during the financial year from GAV to get NAV.
Is property tax paid by tenant deductible by me?
No. Only the one who pays can claim the deduction.
What is standard deduction under Section 24(a)?
You can deduct 30% of Net Annual Value as a flat deduction, regardless of actual expenses.
What is interest deduction under Section 24(b)?
You can deduct home loan interest:
- Up to ₹2 lakh for self-occupied
- Full amount for let-out properties (under old regime)
What is pre-construction interest?
Interest paid before construction completion can be claimed in 5 equal installments starting the year construction ends.
When is only ₹30,000 allowed as interest deduction (not ₹2 lakh)?
- Loan taken before April 1, 1999
- Construction not completed within 5 years
- Loan used for renovation/repair
Can I claim interest on loan from friends/relatives?
Yes, as long as it's for construction/purchase and you can prove payment.
Is principal repayment also deductible?
Yes, under Section 80C, up to ₹1.5 lakh (combined with other 80C investments like LIC, PF, etc.)
What are conditions for claiming 80C deduction?
- Property must be fully constructed
- You must not sell it within 5 years
- Deduction will be reversed if sold earlier
Can I claim tax benefits under new regime (Section 115BAC)?
Under new regime:
- No deduction for interest (except on let-out)
- No 80C benefits (like principal repayment, registration)
Who can claim Section 80EE or 80EEA benefits?
First-time home buyers can claim additional ₹50,000 (Section 80EE) or ₹1.5 lakh (Section 80EEA) subject to specific loan date and property value conditions.
What if the property is jointly owned?
Both owners can separately claim:
· ₹2 lakh interest deduction
· ₹1.5 lakh principal deduction under 80C
...in the ratio of their ownership and repayment.
What if I live in one floor and use another for business?
The floor used for residence = self-occupied
The business-used portion is not taxed under house property (treated under business income or not at all if not rented).
What if I live 6 months and rent out 6 months?
You calculate GAV for the full year, using expected or actual rent (whichever is higher). Deduct full-year municipal taxes.
Can I carry forward house property loss?
Yes. If under old regime, you can carry forward excess loss (beyond ₹2 lakhs) for 8 years.
Is filing return mandatory to carry forward losses?
Yes, file your return on time if you want to carry forward loss. However, house property loss can still be carried forward even in belated return.
What if I have 6 let-out properties?
Calculate income from house property separately for each one.
Can I claim both HRA and home loan benefits?
Yes, if you live in a rented house and your owned property is elsewhere or not self-occupied. Rent must be genuine.
Can advance municipal tax be claimed in year of payment?
No. Only municipal taxes due and paid in the same year are allowed.
What if the tenant pays municipal tax?
You cannot claim that deduction. Only the person who pays gets deduction.
What documents are needed for home loan interest deduction?
- Interest certificate from lender
- Loan agreement
- Ownership proof
- Declaration of usage
Can interest on penalty (like late EMI charges) be claimed?
No. Penal interest is not allowed under Section 24(b).
What if I receive old rent arrears now?
You must pay tax on it in the year you receive it, even if you’re not the owner anymore.
How is shop rent taxed?
If it’s part of a building, it’s taxed as “Income from House Property.”
I gifted my flat to my wife. Who pays tax on rent now?
You are considered the deemed owner, so you pay the tax on rental income.
Can self-employed claim home loan interest deduction?
Yes, they can claim it while calculating their tax liability.
What form should I file if I own more than one house?
Use ITR-2 form if you have more than one house property.
How does taxation work if a property is partly self-occupied and partly let-out?
Calculate income separately:
- One portion as self-occupied
- Other as let-out property
How is house property income taxed?
It is added to your total income and taxed as per your slab rate.
Can loss from house property be adjusted against salary income?
Yes, up to ₹2 lakh (under old regime). Excess can be carried forward.
Is deemed rental income taxed for vacant houses beyond 2?
Yes. Even if they are vacant, income is assumed and taxed.
When is house property income zero?
When it’s self-occupied and no rent is earned, the GAV is considered nil.
If I rent to a relative, can I still show less rent?
No. You must show the fair rental value even if rented to relatives.
Can I claim interest paid to private lender?
Yes. Section 24 does not restrict the source of loan – friends or private financiers allowed.
Is stamp duty and registration allowed as deduction?
Yes, under 80C – but only in the year of payment and within ₹1.5 lakh limit.
Can I claim 80C if I’ve taken the new regime (115BAC)?
No. Deductions under Chapter VI-A (like 80C) are not allowed under the new regime.
Can co-borrowers claim deductions separately?
Yes, if both are co-owners and have repaid the loan from their own income.