If you own more than one property, then only one house of your choice will be considered as self-occupied and others will be considered as let out or Deemed to be let out
Income from house property is one among the taxable heads of income as per the Income Tax act. It constitutes the income earned from a property by his/her owner.
Property hereby refers to any building (house, office building, godown, factory, hall, shop, auditorium, etc.) and/or any land attached to the building (e.g. Compound, garage, garden, car parking space, playground, gymkhana, etc.).
This is the only head of income, which taxes notional income (except under some circumstances under capital gains, income from other sources). The taxability may not necessarily be of actual rent or income received but the potential income, which the property is capable of yielding.
While self-occupied and rental property are within the purview under this head, income from vacant house is dealt with under the head ‘income from other sources’.
The annual value of property consisting of any building or land appurtenant (belonging) thereto, except such property which is used by assessee for the purpose of business and profession, shall be the taxable value.
How to determine Annual Value?
Gross Annual Value (GAV) of property will be required to determine the annual value, which is higher of:
(a) The sum for which the property might reasonably be expected to let from year to year. In cases of properties where Standard Rent has been fixed, such sum cannot exceed this value. However, where property was vacant during the whole or part of the previous year and rent actually received or receivable is less than expected rent, then rent actually received or receivable is taken as GAV.
(b) Where property is actually let out and the rent received or receivable is more than the amount determined in (a) above, the annual value would be the actual rent received.
Following amounts will be excluded while determining GAV:
|Serial No||Particulars||Amount or Percentage Deduction|
|1||Standard deduction||30% of Net Annual Value|
|2||Property acquired/constructed after 1st April, 1999 with borrowed capital (deduction is allowed only where such acquisition or construction is completed within 3 years from the end of the financial year in which capital was borrowed)||Rs. 1,50,000|
|3||In all other cases except in point 2.||Rs. 30,000|
|4||In case of let out property||Full deduction of interest on borrowed capital.|
|Particulars (If Deemed Let out)||House 1||House 2|
|Less: (Municipal Taxes)||(40,000)||(54,000)|
|Net Annual Value (NAV)||3,20,000||6,46,000|
|Deductions u/s 24|
30% of NAV
Interest on borrowed capital
|Income from House Property||49000||2,02,200|
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