House Property

Income from house property is one of the five heads of income under the Income Tax Act, 1961. It applies when an individual earns rental income or owns more than one self-occupied property. Below is a structured breakdown of its taxation rules, deductions, and exemptions. 1. When is Income from House Property Taxable? Taxable if: You […]

Section 22 of the Income Tax Act, 1961, defines when and how income from house property becomes taxable. 1. Conditions for Chargeability (When Tax Applies) Income from a house property is taxable if all the following conditions are satisfied: A.  The Property Must Consist of Buildings or Land Appurtenant Thereto Applies to residential/commercial buildings. Land alone (without construction)→ Not taxable under this

For income to be taxed under the head “Income from House Property” (Sections 22-27 of the Income Tax Act, 1961), all of the following conditions must be satisfied: 1. The Property Must Consist of a Building or Land Appurtenant (Attached) to It Includes: Residential houses, flats, bungalows Commercial properties (shops, offices, warehouses) Land attached to the building (garden, garage,

Annual Value is the taxable value assigned to a property for calculating “Income from House Property”. It represents the property’s reasonable expected annual earning capacity. Key Components of Annual Value Gross Annual Value (GAV) For let-out properties: Higher of: Actual rent received Municipal valuation (standard rent) Fair market rent For self-occupied: Zero (if only one

Unrealised rent refers to rental income that is due but not received from a tenant. The Income Tax Act, 1961, provides specific rules for its treatment under Section 23(1) and Section 25A. Below is a structured explanation: 1. Conditions for Deducting Unrealised Rent Unrealised rent can be excluded from taxable income only if: The tenancy is bona fide(genuine). The tenant has vacatedor steps

Under Section 23(2) to (4) of the Income Tax Act, 1961, a self-occupied residential property (SOP) is taxed differently from let-out or deemed let-out properties. Here’s how the income is computed: 1. Basic Concept For one self-occupied residential property (SOP), the Annual Value is considered NIL under Section 23(2). However, interest on home loan remains deductible. 2. Basic

Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely: — 1. Standard Deduction [Section 24(a)] Flat 30% of Net Annual Value (NAV) Granted automatically, regardless of actual expenses Covers repairs, maintenance, etc. Example:If NAV = ₹5,00,000 → Deduction = ₹1,50,000 2. Interest on Home Loan [Section

When a property is partly self-occupied (SOP) and partly let out (LOP), the Income Tax Act treats it as two separate properties for computation purposes. Step-by-Step Calculation Segregate the Property into Two Parts Self-Occupied Portion (SOP)→ Treated as one house property. Let-Out Portion (LOP)→ Treated as another house property. Compute Income for Each Portion Separately (A) Self-Occupied Portion (SOP) Annual Value (AV)= Nil (since

Under Section 23(5) of the Income Tax Act, 1961, a key exemption applies to real estate developers and builders who hold properties as stock-in-trade (inventory for business purposes). This provision ensures that such properties are not subjected to notional rental income taxation for a specified period. Key Provisions of Section 23(5) Applicability Applies to buildings and land appurtenantheld as stock-in-trade (i.e., properties meant for

Section 25 of the Income Tax Act lays down a specific disallowance: certain types of interest payments are not deductible when computing income under the head “Income from House Property.” 🚫 What Is Not Deductible: Even though Section 24(b) allows deduction for interest on borrowed capital, Section 25 overrides it in the following case: Interest