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    Income From House Property

    Frequently Asked Questions

      • 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.

     

      • 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.

     

      • 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.

      • Income received as rent from subletting of house property will be taxed under “Income from House Property”?

        No. This is because rental income received by the owner of property alone is taxed as “Income from House Property”. Rental income in the hands of anyone other than the owner shall be taxed under “Other sources”. Therefore, income from subletting will be chargeable under “Other Sources”.

     

      • Can a deduction of interest paid against loan taken from friends and relatives be claimed from house property income?

        Yes. A deduction under Section 24 for interest paid on loan availed from friends or relatives is also allowed from the Net Annual Value. The law nowhere mandates that the loan should have been taken only from a bank to claim this deduction.But here, one must note that the principal repayment in respect of such a loan will not qualify for a deduction under Section 80C.

      • I have taken a home loan from a bank for construction of a house in June 2015. The construction of the house is complete in June 2018. I have started paying the EMI for the home loan taken from July 2015. Will I not get any benefit of the home loan repayment made between July 2015 and June 2018 as the construction is complete only in June 2018?

        The income tax law allows you to claim pre-construction interest as a deduction from the Net Annual Value, which is nothing but the interest payment on home loan made between the date of borrowing and date of completion of construction. This interest can be claimed in 5 equal instalments beginning the year of completion of construction besides the regular interest claim.

     

      • How does the claim of deduction under Section 24 and Section 80C work if a home loan has been availed for 2 houses?

        A taxpayer can claim deduction under Section 24 of interest paid on home loan for each of the houses separately. However, the overall loss from house property that can be claimed for a year is restricted to Rs 2 lakhs.As regards 80C deduction, the principal portion of home loan repaid in respect of both houses can be claimed, however within the overall cap of Rs 1.5 lakhs for each financial year.

      • What is a self occupied property, let out property and deemed let out property?

        Self-occupied: Is one where you or your family resides and the question of receiving rental income out of this does not ariseLet Out: Is one which you have given out on rent. Therefore, the rental income would be considered as your income from house property.

        Deemed Let out: When a taxpayer owns more than two house property, the law mandates that only two (Prior to Budget 2019, it was only one property) such properties can be treated as self-occupied while the third one (irrespective of whether let out or not) will be deemed to be let out.

      • I have incurred a loss from house property. I have missed the return filing deadline. Will I lose the benefit of carry forward of losses incurred

        One is supposed to file his return within the due date which is 31 July for most of the individual taxpayers. If this is not done, losses if any, would not be allowed to be carried forward to future years for set off. However, losses from house property is an exception to this rule and can be carried forward to future years even if return is not filed on time.

     

      • I have paid municipal taxes on my flay pertaining to the year 2017-18 in April 2018. Can I claim deduction of such taxes for FY 2017-18 (AY 2018-19)?

        Municipal taxes are always allowed as a deduction only on payment basis. Though you have paid taxes pertaining to FY 2017-18, since the payment has been made in April 2018 i.e. FY 2018-19, it will be allowed for FY 2018-19 only as a deduction from Gross Annual Value

     

      • I am the owner of a shop space which I have given out on rent. How should I offer such income to tax?

        If rent has to be charged to tax under “Income from House Property”, the property that has been given on rent must be a building or a land appurtenant thereto. Since the shop falls under the definition of a building, the rental income from such shop must be offered to tax under “House Property only”.

     

      • I have transferred my flat in the name of my wife as a gift. She receives monthly rental from this flat. Should she offer this as her income?

        Since the flat has been given to your wife as a gift i.e. for nil consideration, you will be considered as the “deemed owner” of the house and the income from renting the flat will be clubbed in your hands and you must offer the same to tax as house property income.

     

      • I have received an unrealised rent which were arrears in earlier years. What will the tax treatment for such realisation of arrears of rent ?

        Since the unrealised rent was excluded from “Income from house property” in the previous years due to non- realisation, you will have to include this income in the year of receipt of arrears of rent. It is not necessary to be the owner of the property in the year of receipt. You can also deduct 30% of such rent while charging it to income tax.

     

      • I have 6 separate let out properties.Should I calculate the house property income for each individual property or by clubbing all the rental receipts in one calculation?

        The calculation will have to be made separately for each of the properties.

     

      • I own a property which was self-occupied from April 2017 to September 2017 and then was let out from October 2017 to February 2018. How will I compute my Income from house property ?
        For the purpose of computing Income from house property, such property will be considered to let-out throughout the year. However, actual rent received will only be considered for let-out period i.e October 2017 to February 2018.

     

      • How to compute income from a house property, when part of the property is self-occupied and part is let-out?

        If a house property consist of 2 or more units, one of which is self-occupied and the remaining units are let-out then the all the units will be treated as independent units and income from those units will be computed in the following manner:a. Income from unit occupied by the owner will be computed as Self Occupied property income and

        b. Income from unit let-out by the owner will be treated as let-out property income

     

    • How to claim both HRA and home loan?
      HRA exemption (section 10-13a) and deduction for home loan installment (section 80C) and interest are governed by different sections. And hence employees can claim both of them. House rent allowance is to be claimed either by submitting proofs like rent receipts and rent agreement to the employer before the end of the year. Here it is to be noted that HRA cannot be claimed if you are a joint owner of the property and paying rent to the other owner or employee rents out the employer’s property and pays him the rent. But please note that this situation can be monitored closely by the income tax department and the department may disallow the claims if proper documents or explanations are not available.
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