644+ Lawyers are online 
How to calculate income from your house property
August 17, 2022Calculation of income from House Property
The Property tax calculation is calculation is based on the annual value of your property. There may be different annual values for Self-occupied properties and let-out properties.Gross Annual Value
Gross Annual Value (GAV) of the property will be required to determine the annual value, which is higher of:- The sum for which the property might reasonably be expected to let from year to year. In the case where standard rent has been set, the such sum cannot exceed this value. However, in the case of a property which was vacant for the whole or part of the previous year and the rent received is less than expected rent, then the rent actually received is taken as GAV.
- Where property is actually let out and the rent received or receivable is more than the amount determined in (a), the annual value will be actual rent received.
Exclusions while determining GAV
- The amount of municipal tax realized from a tenant
- Notional interest on the amount received towards & lsquo rent/security deposit' from the tenant
- Repairs carried out by the tenant
When Annual value is Nil?
The annual value of your property shall be considered & lsquo nil' in the following cases: -- Self-occupied properties
- If the owner of only one residential house is unable to occupy it on account of his employment, business, or profession in any other place and he is residing in a property not owned by him.
Net Annual Value
The Net Annual Value is arrived after deducting the municipal taxes and the unrealized rent (subject to certain conditions). The receipt of any unrealized rent shall be chargeable to tax in the year of receipt.Deductions under Section 28 of Income Tax Act 1961
Following deductions are allowed under Section 28 & ndash- Standard deduction & ndash Standard deduction is 30% of the Net annual value. This 30% is allowed even when your actual expenditure on the property is higher or lower. Therefore, the deduction is irrespective of the actual you may have incurred on insurance, repairs, electricity, water supply, etc.
- Deduction of interest on Home loans for property & ndash In case you take a home loan for construction, repair, purchase, or reconstruction of your house property, the interest is allowed as a deduction from Net Annual Value. Deduction for interest on money borrowed is allowed on an accrual basis. So keep claiming your interest deductions on each year's basis of interest that is due. The deduction is allowed on whichever is lesser between, Rs 1,50,000 or the actual interest amount (in case the construction was completed within 3 years of taking the loan on or after 1-April-1999). In another case, it is between Rs 30,000 and the accrual interest, whichever is less.
How to save tax on Income from House Property?
- Any empty house that you own will still be taxed based on the fair rental value, so you should let any or all vacant properties out. This will ensure income and no loss because of taxation.
- If you own multiple properties, then only one can be registered as your residence and will fall under Self- occupied property.
- Taxation on income from house property can be divided between co-owners and hence lessen the burden.
- If you are planning on buying a second house, and you wish to avoid paying tax on the second house, register the second property on your spouse/relative's name to avoid excess taxation.
Greater Kailash - 1, Delhi
5 years
These guides are not legal advice, nor a substitute for a lawyer
These articles are provided freely as general guides. While we do our best
to make sure these guides are helpful, we do not give any guarantee that
they are accurate or appropriate to your situation, or take any
responsibility for any loss their use might cause you. Do not rely on
information provided here without seeking experienced legal advice first. If
in doubt, please always consult a lawyer.
Comments by Users
No Comments! Be the first one to comment.
Popular Tax Lawyers
User Reviews
4.9 - 20 reviews
very informative.
very good article. Can you tell me more about the law?
very well written
Very good work with the article. Gave a nice clarity about the subject.
nicely explained. Thanks fro the information
nicely written. Great work
nice article. Thanks for the information
It’s a very nice article.
nice artcile
good work. Keep it up
very good article. Please provide more information on the subject
Very helpful for my legal case.
Answered all my legal queries.
great content. Thanks.
Very informative and a good read as well.
thanks for the information
thanks for the advice
solved my queries.
The article is written ver well. Learned a lot about my case through this.
Tells all the legalities about the subject. Good work.
VIEW ALL
