1.3 Income from House Property: Section 22 to 28

Income from house property is bifurcated between income from Let out property and Income from Self occupied property.

Let out property can be further bifurcated as Deemed let out, Partial let out, let out property, property held as Stock-in-trade.

Self-Occupied property: As per the Income Tax Act, Assessee can claim maximum to two (2) house property as Self Occupied property.

a) Under the Self occupied property, Gross annual value (GAV) will be zero for Income calculation, hence standard deduction (Section 24 (a)) will not be applicable.

b) Interest on borrowed capital for the purpose of home loan will be allowed maximum to 200,000 INR ( Pls refer my explanation 1.4 Deduction of Interest on home loan 24(b))

Let out property:

a. Deemed Let out property: If Assessee own more than 2 (two) house property, if other property (other than 2 (two)) not let out, will be considered as deemed let out property.

i) In case of Deemed let out, Expected rent (Higher of Municipal value or Fair rent maximum to standard rent) will be considered as GAV.

ii) Actual paid Municipal tax and 30% standard deduction will be allowed as deduction.

iii) Interest will be allowed without any ceiling limit ( Pls refer my explanation 1.4 Deduction of Interest on home loan 24(b))

b. Let out property: Assessee has let out their property

i) In case of let out property, higher of Expected rent and Actual received or receivable rent will be considered as GAV.

ii) Actual paid Municipal tax and 30% standard deduction will be allowed as deduction.

iii) Interest will be allowed without any ceiling limit ( Pls refer my explanation 1.4 Deduction of Interest on home loan 24(b))

Note:

i) Property held as stock-in-trade – benefit of Gross annual value of such property can be claim NIL upto 2 (two) years from the end of financial year in which certificate of completion of the property is obtained from the competent authority.

ii) In case property is let out for part of the year and self-occupied for the part of the year, in such case GAV will be calculated higher of ER(ER will be considered for whole year) and actual rent for the let out period.

Note: This document is just for your basic understanding and not a legal document. In case of any query/correction please put your comment or message me. For more understanding and clarity Please refer Income Tax Act 1961 Income from house property.