If you own a property which is a building, plot or land attached to such building, then any rental income from such property will be chargeable to tax under the head “Income from House Property”.
One important point to be kept in mind is that such a property should not have been used for personal business or profession. So even if you own a shop (which is a building) and given it on rent, than income from such shop will be taxed as “Income from House Property”.
Let’s understand what exactly house property means in order to understand the income from house property.
What conditions need to be met?
Now the income will be taxed as income from house property only if following conditions are satisfied:
Now there are two scenarios of income from house property:
Rental income from subletting is not taxed as income from house property since in that case person receiving the rent income from subletting is not the owner of the property.
First we determine the Gross Annual Value. The gross annual value of a self-occupied house is zero. Whereas in case of Let out house, it is the rent collected.
| GROSS ANNUAL VALUE OF THE PROPERTY |
| Less: Municipal Taxes paid by owner |
| = Net Annual Value (Gross Annual Value – Property Tax) |
| Less: 30% standard deduction on NAV ( under Section 24(a) of the Income Tax Act) |
| Less: Interest on home loan (allowed under Section 24(b)) |
| = Income 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 in the current Assessment Year. Losses that cannot be set off, shall be carried forward up to 8 assessment years.
You can claim home loan interest on any number of homes you own. The home loan benefits can be categorised into two parts, principal repayment and interest payment. Benefits for principal repayment are available u/s 80C and the maximum deduction limit u/s 80C is Rs. 1,50,000.
The benefits for home loan interest payments are available u/s 24B and 80EE of the income tax act. As per income tax act, you can have only one home two homes as self-occupied (from FY 2019-20 / AY 2020-21) and for that, you can claim the home loan interest benefits u/s 24B up to Rs. 2,00,000.
For all the let out and deemed let out properties, you can claim the home loan interest benefits u/s 24B without any limits.
This was a new proposal which had been made in Budget 2016-17. The same will be continued in FY 2017-18 / AY 2018-19 too. First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.
Besides the tax deductions under Section 80C and 24b, an individual can now claim up to Rs 1.5 lakh under Section 80EE from FY 2019-20 or AY 2020-21 onwards, subject to below conditions;
Kindly note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. Under Section 24, even interest paid on home loans from friends and relatives is eligible for tax benefit.
To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EE and 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.
Continue reading :
Under Construction House : How to claim tax deduction on Home Loan Interest payments?
Disclaimer: All information in this article has been provided by Quicko.com and Relakhs.com is not responsible for correctness of the data. Quicko is engaged in assisting in online ITR preparation and filing. You can sign up with Quicko.com and efile your tax returns within minutes absolutely free. The author can be contacted at anand@quicko.com.
(Kindly note that ReLakhs.com is not associated with Quicko.com) (Post last updated on : 23-Sep-2023))
This post was last modified on September 23, 2023 11:13 am
Filing your Income Tax Return (ITR) is not just about meeting deadlines—it’s about choosing the…
Retirement planning in India is often misunderstood. Many people think any long-term savings or investment…
You’ve probably seen the same property quoted at different prices. One person says ₹60 lakh,…
Buying insurance is easy. Getting your claim settled—that’s where the real test begins. For any…
Gifting immovable property—like land, plots, or houses—is super common in India. Families often do it…
Most people believe that investing alone is enough to create wealth. But in reality, many…
This website uses cookies.
View Comments
Hi Sreekant
. I have some query.
I have two flats in city. Both are given on rent as both flats are away from work place. and I myself stay in rented flat.
My one flat is under home loan whereas for other flat no loan taken. I am salaried employee and an Indian citizen.
My query is can I claim home loan interest component exemption along with principal from taxable salary? also can I claim HRA exemption since I stay in rented apt? And also show rental income less of municipal taxes paid for both flats?
Please advice ?
Hi Sreekant
Glad I saw this post. I have some query.
I have two flats in city. Both are given on rent as both flats are away from work place. and I myself stay in rented flat.
My one flat is under home loan whereas for other flat no loan taken. I am salaried employee and an Indian citizen.
My query is can I claim home loan interest component exemption along with principal from taxable salary? also can I claim HRA exemption since I stay in rented apt? And also show rental income less of municipal taxes paid for both flats?
Anything else that you can suggest would be of great help :)
Regards
Anamika
Dear Anamika,
Yes, you can claim HRA exemption, interest payments as tax deduction, 30% standard deduction on both properties, deduction of municipal taxes paid on both the properties..
If you get rental income then you can deduct above amounts (except hra) and calculate 'income from house property' for both the houses.
Kindly read: Income from house property & tax benefits on home loan.
Thanks Sreekanth for reply.
Is it necessary to claim these that rental agreements to be registered (duty paid)? Seems few employers ask for registered agreement copies only else they don't consider rental income and HRA exemption too (since staying on rented flat) In short all 3 agreements for 11 months are not registered.
what if its not registered and agreements are notarized on 100 Rs. stamp paper?
Pls help advise.
Thanks.
Dear Anamika,
Legally, the rental agreements have to be registered to make them valid docs.
But most of the employers do accept normal rental agreement which is done on Stamp paper (duly signed by both parties).
So, it depends on Employers' compliance requirements, which may vary.
Thanks Sreekanth
My employer is ready to accept normal rental agreement which is done on Stamp paper (duly signed by both parties). but needs declaration from me on 100 Rs stamp paper that any issue arises Company wont be responsible but me.
Is it ok to submit such affidavit. What's your thoughts on this?
Dear Anamika,
So, your employer is trying to play safe :)
If your case is genuine (paying rents especially through online/cheque mode), I dont see any issue in this..
Dear Sreekanth,
I highly appreciate your efforts and need your valuable advice in this scenario:
Me and my wife both are working professionals and buying a property in which 80% amount is taken as home loan from bank. I will be first owner and she will be co-owner in that, and similarly i am primary applicant and she is co-applicant in home loan. In that case, bank people said both will get tax claiming certificates. However, as both of us are individually eligible to pay monthly EMI's, so we can either pay individually or both can pay 50%-50% EMI amount.
Also, this property we are going to let out.
So my query is, if any one of us are paying full EMI. Then the income from house property will add to that individual's income or will that be added 50-50% to both of our incomes as we both are equal owners ??
Pls suggest whether will it be good decision to pay EMI amount individually or both should pay 50-50% EMI.
Regards,
Ankur
Dear Raj,
Yes, rental income has to shared as per the ratio of ownership in the property. If it is 50:50, both of you have to declare 50% of rental income received in your income tax returns.
If both of you have to claim 50% of EMIs as tax benefit, can pay EMIs through joint account.
Dear Shreekanth,
I have a shop which i let out in the month of Novrmber 2016 and due to some undue reasons the tenant had left the tenancy contract in the month of December 2016. For one month period i have received the rent amounting INR 18,000.
Right now the shop is vacant.
Please let me know if the shop remains vacant till March 2017, how would i will be filing my tax return under the head Income from House Property?
Dear Siddesh,
This is a case of 'Let-out property kept vacant for the part of the year'.
You can deduct property taxes (if any), 30% of actual rent received & home loan interest (if any) from actual rent received and declare it as 'income from house property' in Income Tax Return.
Hi, Iam stayinin govt accodation of husband and both of us not getting hra. We own a flat in same city and whether the rent fom thisFlat is taxable?
Dear Jeyasree..If you are showing it as Let-out property, rental income is taxable.
Hi sreekanth,
I have a query on house property.i hv a house in blore which is unoccupied from oct and on loan.I am currently staying in pune and paying rent due to my tranfer.so can i show any other amount for IT apart from claim in 80C and 24.
Dear Sowmya,
If HRA is part of your salary, you can claim HRA exemption.
Kindly read: List of income tax deductions under various Sections.
Sir
In same city i have two flats. One flat i cleared housing loan which is self occupied. Second flat is vacant not given on rent. Can i avail interest on housing loan as tax exemption
Dear satish ..Yes, you can avail the entire interest amounts u/s 24.
hi iam harikishan ,iam salaried person and we purchased a flat in joint name of my wife.i would like to avail the interest of home loan and my wife principal. is it right way as per income tax rules.
Dear harikishan,
I believe that it is not allowed.
Hi Sir,
lets say, in the same financial year..i stared for about 4 months in the Rent house and rest in Self occupied property. In this case can i avail both HRA and House Loan exceptions?
Dear guest ..Yes, for the respective duration.
Hi Sreekanth,
My father paid for the complete site registration by his account and got it registered under my name to get the loan for construction as my father was retired and didn't have any income. Now the house is earning interest. Is there any way my father can also be part of that income, as he paid for the registration ??? or Is there any way to make my father to be accounted for that share of that rented income.
Dear Naveen,
You can get your father's name included in the Sale Deed and make him co-owner of the property.
Kindly read: 5 ways of transferring the Real estate property!