{"id":27028,"date":"2019-12-03T19:10:15","date_gmt":"2019-12-03T13:40:15","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=27028"},"modified":"2019-12-05T19:00:17","modified_gmt":"2019-12-05T13:30:17","slug":"tax-computation-on-house-property-income","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/tax-computation-on-house-property-income\/","title":{"rendered":"Tax Computation on House Property Income"},"content":{"rendered":"

Owning a house is every person’s dream. People work hard in their life and save money by bits and pieces to collect one large amount in order to buy a house. In earlier times owning a house was not that easy as it requires a large sum of money to be paid at once. However, in the present scenarios buying a house has become a lot easier because of the availability of loans from all the government and non-government banks. A person who wants to buy a new house or renovate the existing house can avail Home Loan from Banks and utilize the availed money along with his savings to fulfill his dream. However, owning a house brings in a lot of extra responsibilities such as paying houses property<\/a> taxes, etc. In this blog, we will discuss in detail the process of computation of tax on House Property Income.<\/p>\n\n\n\n

Types of House Property<\/h2>\n\n\n\n

Self occupied House Property<\/strong><\/p>\n\n\n\n

The property which is used by a person for residential purpose is known as Self Occupied House Property. This property may be occupied by the family of taxpayer including his parents or spouse and kids. A vacant house is also considered as a self-occupied property for the purpose of Income Tax. Before the Financial year 2019-20 if a taxpayer-owned more than one property, then one property was considered as Self-occupied House Property and the other one was considered to be let out property. However, the choice of which property to choose as self-occupied is up to the taxpayer. For the Financial Year 2019-20 and onwards a homeowner can claim his 2 properties as self-occupied and the remaining houses as let out for income tax purposes.<\/p>\n\n\n\n

Let Out House Property<\/strong><\/p>\n\n\n\n

The house\nproperty which is rented for the whole year or part of the year is known as a\nlet out house property for the purpose of income tax.<\/p>\n\n\n\n

Inherited property<\/strong><\/p>\n\n\n\n

Property\ngained from ancestors can be considered as a self-occupied property or a let-out\nproperty. The usage of this property is similar as discussed above.<\/p>\n\n\n\n

Steps to Calculate House Property Income<\/h2>\n\n\n\n

The\nfollowing are the ways to compute the House property income:<\/p>\n\n\n\n

Determine Gross Annual Value<\/strong>: The gross annual value of a self-occupied property is zero and for the let out a property it is the amount of rent collected.<\/p>\n\n\n\n

Reduce Property Tax<\/strong>: The property tax that is paid\nis allowed as a deduction from Gross Annual Value<\/p>\n\n\n\n

Net Annual Value:<\/strong> You have to determine the net\nannual value of the property to calculate the income from the property. Net\nAnnual Value is determined by subtracting the amount of Property tax from the\nNet Annual Value as discussed above.<\/p>\n\n\n\n

Reduce 30% NAV:<\/strong> As per section 24 of the Income Tax Act 30% on NAV is allowed as a deduction from Net Annual Value. Other expenses such as paint and repair work cannot be considered as tax relief beyond the 30% cap under Section 24.<\/p>\n\n\n\n

Reduce home loan interest<\/strong>: The deduction made under\nSection 24 is also available for interest paid on the Home Loan availed.<\/p>\n\n\n\n

House Property Income<\/strong>: the resulting value is the\nincome from house property which is taxed at the slab rate applicable to the\ntaxpayer.<\/p>\n\n\n\n

In the\ncase of let out properties, the Gross Annual Value is the rent of the property.\nThe rental value of the house must be higher or equal to the rent as determined\nby the municipality.<\/p>\n\n\n\n

Important provisions related to the calculation of House\nProperty Income:<\/h2>\n\n\n\n

Section 22<\/strong><\/p>\n\n\n\n

House\nProperty Income under this head shall be taxable if the following conditions\nare fulfilled :<\/p>\n\n\n\n