The annual Value of a self-occupied property is zero or can even be negative if home loan interest is paid. If the property is let out, its rent ... --- layout:default --- X InvestinMutualfundsviaBLACKAPP (1200) Install ✕ PleaseFilltheDetailstodownload Name Email* Phonenumber UserCategory Selectyouroption CA TaxPractitioner Advocate Businesslessthan100crTurnover Businessgreaterthan100crTurnover Student/Teacher Thankyouforyourresponse Areyouasalariedemployee?NowyoucanfileyourITRonthegowiththeBlackapp! Areyouasalariedemployee?FileyourITRonthegowiththeBlackapp! Alsokickstartyourinvestingjourneywithmutualfundplansandmuchmore SendDownloadLink Downloadlinksent BrowsebyTopics IncomeTax HouseProperty Business,Professional&Freelance EfilingIncomeTaxReturn IncomeTaxRefunds PayingTaxDue SalaryIncome CapitalGainsIncome Otherincomesources AdvanceTax NRI HUF IncomeTaxNotices 80Deductions IncomeTaxVerification SavingSchemes ITR UsefulTools EMICalculator IFSCCodeSearch IncomeTaxCalculator RentReceiptsGenerator HRACalculator TaxRefundStatus HomeLoanEMICalculator RecentArticles HowtofileITR-1withrentalincome? SaleofUnder-ConstructionProperty:HowtocalculateCapitalGains? HousePropertyorBusinessIncome–RayalaCorporationVsAssistantCommissionerofIT PropertytaxinMumbai GHMC:GreaterHyderabadMunicipalCorporationPropertyTax POPULARARTICLES Budget2021Live MutualFunds ITR HowtofileITR WhichITRtoFile IncomeTaxLogin IncomeTaxCalculator IncomeTaxSlabs InvestinBestTaxSavingMutualFunds InvestinMutualFundsviaSIP HowtoViewForm26AS-yourTaxCreditStatement Howtoe-fileyourIncomeTaxReturn UnderstandingForm16 IncomeTaxDepartmentPortal–Login&RegistrationGuide Youmightbeinterestedin Whatarethetaxbenefitsonstampdutyandregistrationchargesofaproperty Section206AB AcasestudyonearningIncomefromRent Acasestudyondeductionforpre-constructioninterest AcasestudyonsavingtaxesunderSection24 Casestudyonselfoccupiedhouse Home IncomeTax HouseProperty DeductionsFromHousePropertyIncome–Section24 DeductionsFromHousePropertyIncome–Section24 Updatedon: Oct04,2021-02:04:33PM 08minread. Buyingahomeisoneofthemostcommonlong-terminvestmentgoalsformostIndians.Agreatchunkofone’sincomegoestowardshomeloanEMI.So,thegovernmenthasgivenplentyoftaxbenefitsforhousepropertyunderSection24oftheIncomeTaxAct. LatestUpdates UnionBudget2021Outcome-Thedeductionforinterestonhousingloansundersection80EEAistobeextendedtoloanstakenupto31stMarch2022.Unionbudget2019Outcome-Thetaxpayersareallowedtodeclarethevalueof‘twohouses’asself-occupiedasagainstonehouseallowedpreviously. IncomefromHouseProperty Thefollowingincomewillbetaxableunderthehead‘Incomefromhouseproperty’oftheIncometaxact,1961. RentalIncomeonaletoutpropertyAnnualValueofapropertywhichis‘deemed’tobeletoutfor incometaxpurposes (whenyouownmorethantwohouseproperty)TheannualValueofaself-occupiedpropertyisNil. TheannualValueofaself-occupiedpropertyiszeroorcanevenbenegativeifhomeloaninterestispaid.Ifthepropertyisletout,itsrentreceivedisyourGrossAnnualValue.Foradeemedtobeletoutproperty,areasonablerentofasimilarplaceisyourGrossAnnualValue. DeductionsUnderHouseProperty Municipaltax–Municipaltaxesistheannualamountpaidtothemunicipalcorporationofthatarea.MunicipaltaxesaretobedeductedfromtheGrossAnnualvaluetoderivetheNetannualvalueofthehouseproperty.Deductionofmunicipaltaxisallowedonlyifithasbeenbornebytheownerandpaidduringthatfinancialyear.StandardDeduction–StandardDeductionis30%oftheNetAnnualValuecalculatedabove.This30%deductionisallowedevenwhenyouractualexpenditureonthepropertyishigherorlower.Therefore,thisdeductionisirrespectiveoftheactualexpenditureyoumayhaveincurredoninsurance,repairs,electricity,watersupplyetc.Foraself-occupiedhouseproperty,sincetheAnnualValueisNil,thestandarddeductionisalsozeroonsuchaproperty.DeductionofInterestonHomeLoanfortheproperty–HomeownerscanclaimadeductionofuptoRs.2lakhontheirhomeloaninterestiftheownerorhisfamilyresideinthehouseproperty.Thesametreatmentapplieswhenthehouseisvacant.Ifyouhaverentedouttheproperty,theentireinterestonthehomeloanisallowedasadeduction.YourdeductiononinterestislimitedtoRs.30,000ifyoufailtomeetanyoftheconditionsgivenbelowfortheRs.2lakhrebate.-Thehomeloanmustbeforthepurchaseandconstructionofaproperty;Theloanmustbetakenonorafter1April1999;Thepurchaseorconstructionmustbecompletedwithin5yearsfromtheendofthefinancialyearinwhichtheloanwastaken PreConstructionInterest Whenyouhavetakenaloanforthepurchaseorconstructionofahouseproperty,youcanclaimadeductiononpre-constructioninterest.However,thisisnotallowedinthecaseoftheloanforrepairsorreconstruction.Thetotalamountofpre-constructioninterestandinterestonahousingloanthatcanbeclaimedinayearshouldnotexceedRs2lakhinanycase.Thedeductionforthisinterestisallowedin5equalinstalmentsstartingfromtheyearinwhichthehouseispurchasedortheconstructioniscompleted.Forexample,iftheconstructionofyourpropertycompletedinFY2018-19,on25June2018,youcanclaim1/5thofinterestpaiduptill31March2018whenyoufileyourreturn forFY2018-19. ConditionsforClaimingInterestonHomeLoan Youneedtomeetallthebelow3conditionstoclaimthisdeduction Theloanhasbeentakenafter1stApril1999forpurchaseorconstructionTheacquisitionorconstructioniscompletedwithin5years(3YearstillFY2015-16)fromtheendofthefinancialyearinwhichtheloanwastakenThereisaninterestcertificateavailablefortheinterestpayableontheloan.NotethatyourinterestdeductionmaybelimitedtoRs30,000 ifanyoneoftheseconditionsismet–Theloanisborrowedbefore1stApril1999forpurchase,construction,repairsorreconstructionofhousepropertyTheloanisborrowedonorafter1stApril1999forpurchase,construction,repairsorreconstructionofhouseproperty. ComputationofIncomeUnderHouseProperty Say,apersonrepaysahousingloanofRs4lakhannuallyoutofwhichRs2lakhistheinterestcomponent.Hehasalsoincurredapre-constructioninterestofRs3lakh.HeisearningRs7000monthlyfromalet-outpropertyandalsopaysmunicipaltaxesofRs3000forthehouse.Let’scalculatehisIncomefromhousepropertyinboththescenarios:1.Hehasaself-occupiedproperty,or2.Thepropertyisrentedout TypeofHousePropertySelfOccupiedLetOutGrossannualValue(Rentpaid-7000*12)NIL84,000Less:MunicipalTaxesorTaxespaidtolocalauthoritiesNA3,000NetAnnualValue(NAV)Nil81,000Less:StandardDeduction(30%ofNAV)NA24,300Less:InterestonHousingLoan200,000200,000Less:Pre-constructioninterest(1/5thof3Lakhs)60,00060,000IncomefromHouseProperty(260,000)(203,300)Overalllossrestrictedto(200,000)(200,000) Remember,themaximumlossset-offallowedinafinancialyearislimitedtoRs2lakh.Theremaininglosscanbecarriedforwardtofutureyears–8yearsintotal.However,inthese8years,itcanonlybesetofffromincomefromhouseproperty. Exampleofclaimingdeductionsunderthefollowingscenario: MrXhas3houseproperty,2areself-occupied,1ofthemisofferedforrent.Interestpaidonahomeloanofboththeself-occupiedpropertiesisRs3.00lakhsandinterestpaidonrentoutapropertyisRs.2.5lakhs.Whatalldeductionscanbeclaimedbyhimunderhousepropertyincome?Self-occupiedproperties:AftertheamendmentinBudget2019,MrXcanclaimtwopropertyasself-occupiedpropertieswithannualasNil.Previousto2019,onlyonepropertywasclaimedasself-occupied,thenotionalrentofthe2ndpropertywastaxable.MrXcanclaimamaximumofRs.2.00lakhoftheaggregatededuction(forboththeself-occupiedproperties)againstactualhomeloaninterestpaidofRs3lakhs.Astheannualvalueofself-occupiedpropertiesisconsiderednil,housepropertyincomewillbecomenegativeafterclaiminghomeloaninterest.Thisnegativeamountcanbesetoffagainstotherincomeofthecurrentyear.Also,thelossamountcanbecarriedforwardforthenext8AYswhichcanbesetoffagainstfuturehousepropertyincomeonly.Rentedproperty:Inthecaseofrentedproperty,actualrentreceivedorreceivablewillbeconsideredasa‘Grossannualvalue’Deductionslikemunicipaltaxespaid,actualinterestonhousingloan(noceilinglimitforclaiminginterestonletoutproperty)willbeallowedasdeduction.Here,MrXcanclaimactualhomeloaninterestpaidofRs.2.5lakhsasadeductionfortheletoutproperty.MrXcanalsoclaimadeductionofuptoRs.1.5lakhforprincipalrepaymentundersection80Cwhichwillbetheaggregateofallhomeloanrepayments.Further,itshouldbenotedthatincaseMrXoptsfora‘Newtaxregime’forFY2020-21,thedeductionforinterestonhomeloanaswellas80Cdeductionforrepaymentoftheprincipalamountofloanwillnotbeeligible.Also,onecannotsetoffthehousepropertylossagainstanyotherheadofincome. FileyourincometaxforFREEin7minutes Free,simpleandaccurate.Designedbytaxexperts UploadyourForm-16 BrowsebyTopics IncomeTax HouseProperty Business,Professional&Freelance EfilingIncomeTaxReturn IncomeTaxRefunds PayingTaxDue SalaryIncome CapitalGainsIncome Otherincomesources AdvanceTax NRI HUF IncomeTaxNotices 80Deductions IncomeTaxVerification SavingSchemes ITR UsefulTools EMICalculator IFSCCodeSearch IncomeTaxCalculator RentReceiptsGenerator HRACalculator TaxRefundStatus HomeLoanEMICalculator RecentArticles HowtofileITR-1withrentalincome? SaleofUnder-ConstructionProperty:HowtocalculateCapitalGains? HousePropertyorBusinessIncome–RayalaCorporationVsAssistantCommissionerofIT PropertytaxinMumbai GHMC:GreaterHyderabadMunicipalCorporationPropertyTax POPULARARTICLES Budget2021Live MutualFunds ITR HowtofileITR WhichITRtoFile IncomeTaxLogin IncomeTaxCalculator IncomeTaxSlabs InvestinBestTaxSavingMutualFunds InvestinMutualFundsviaSIP HowtoViewForm26AS-yourTaxCreditStatement Howtoe-fileyourIncomeTaxReturn UnderstandingForm16 IncomeTaxDepartmentPortal–Login&RegistrationGuide Youmightbeinterestedin Whatarethetaxbenefitsonstampdutyandregistrationchargesofaproperty Section206AB AcasestudyonearningIncomefromRent Acasestudyondeductionforpre-constructioninterest AcasestudyonsavingtaxesunderSection24 Casestudyonselfoccupiedhouse Maximizetaxsavings upto₹46,800easily •InvestindirectELSSfunds •0%commission Startinvestingnow or Getdownloadlink Downloadlinksent Top Hide→ CONTENTS Wasthisarticlehelpful? Thankyouforyourfeedback Submit Haveaquery? 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