House property could be your home or any other building, including factory
buildings, offices, shops, godowns and other commercial premises, or any land attached to
the building like a parking lot, garden, garage etc. The Income-tax Act does not differentiate
between commercial and residential property. Every type of property is taxed under the head
‘Income from House Property’ in the income
tax return(ITR). You may compute such house property income using the calculator here
Income From House Property Calculator. Follow the below steps to understand how the calculator
is used in computing your
house property income under various circumstances:
A) Income from Self-occupied Property
Where the property is occupied by you for your own residence or remains unoccupied throughout the year, then the income of 2 such house properties can be taxed as ‘Income from Self-occupied Property’ where the taxable amount shall be nil. However, you may claim interest on a home loan.
Select the assessment year for which you wish to file your ITR and enter the interest amount on the home loan paid during the previous year. You will now see your house property income generated on the screen. (calculator allows an interest amount of more than INR 2,00,000 for self-occupied and the answer doesn’t appear)
B) Income from Let-out Property
Where the property is let out on rent for the entire year;
- Select the assessment year for which you wish to file your ITR
-
To determine the annual value click on ‘calculate’ and enter the corresponding amounts in each box. (unrealized rent is included twice in the calculator-once in annual lettable value and once on the face of the calculator) Note:
- Enter ‘0’ if any of the fields do not apply to you.
- ‘Municipal valuation of property’ is the value determined by the municipal authorities for levying municipal taxes on house property.
- Market rent means rent that a similar property in the same locality would fetch.
- Standard rent is a rent fixed by the Rent Control Act.
- Other fields may not apply under the given case.
- Enter the municipal taxes paid by you during the year
- Enter the interest amount on the home loan paid during the previous year. By doing that, the calculator shall generate your income from the let-out house property and your total income from the house property.
C) Where let out property is vacant for part of the year
Follow the above steps and while filling amounts in the ‘Annual lettable value’ section, fill in the ‘loss of rent due to vacancy’
How to calculate income from house property?
Calculating income from house property in India is an essential aspect of determining your taxable income. Here's how you can calculate income from house property:
Step 1: Determine the Type of Property
- Firstly, identify the type of property you own. It can be a self-occupied property, a let-out property, or a property that's deemed to be let out.
Step 2: Calculate Gross Annual Value (GAV)
- For a self-occupied property: If you live in the property, the GAV is typically considered as zero for tax purposes.
- For a let-out property: Calculate the fair rental value or the actual rent received, whichever is higher.
- For a deemed to be let-out property: If you have more than one house property and all are self-occupied, one is considered as deemed to be let out, and GAV is calculated as if it were rented.
Step 3: Deduct Municipal Taxes
- Deduct any municipal taxes paid during the year. This is the only deduction allowed under the income from house property.
Step 4: Calculate Net Annual Value (NAV)
- GAV minus municipal taxes equals the NAV.
Step 5: Deduct Standard Deduction
- For a let-out property, you can deduct a standard deduction of 30% of the NAV for repairs, maintenance, and other expenses.
Step 6: Deduct Interest on Home Loan
- If you have taken a home loan for the property, you can deduct the interest paid on the loan. The maximum deduction allowed is currently Rs. 2 lakh for self-occupied property and there's no upper limit for let-out or deemed to be let-out properties.
Step 7: Calculate Income from House Property
- Subtract the standard deduction and home loan interest from the NAV. This gives you the income from house property.
Step 8: Include it in Your Total Income
- The final figure obtained in Step 7 is included in your total income and is subject to income tax.
It's essential to note that the rules and deductions related to income from house property may change over time, so it's crucial to refer to the latest tax regulations or consult a tax expert for the most accurate calculations and to ensure compliance with the current tax laws.
Scenario: Mr. Sharma owns a house property that is let out for rent. He paid Rs. 10,000 in municipal taxes during the year. He has a home loan for this property and paid Rs. 2,50,000 in interest on the loan during the year.
Step 1: Determine the Gross Annual Value (GAV) For a let-out property, GAV is the higher of the fair rental value or actual rent received. Let's assume Mr. Sharma received an annual rent of Rs. 3,60,000 for the property.
Step 2: Deduct Municipal Taxes Deduct the municipal taxes paid. In this case, it's Rs. 10,000.
GAV - Municipal Taxes = Rs. 3,60,000 - Rs. 10,000 = Rs. 3,50,000
Step 3: Calculate the Net Annual Value (NAV) The NAV is Rs. 3,50,000.
Step 4: Deduct Standard Deduction For let-out properties, you can deduct a standard deduction of 30% of the NAV.
Standard Deduction = 30% of Rs. 3,50,000 = Rs. 1,05,000
Step 5: Deduct Interest on Home Loan Mr. Sharma paid Rs. 2,50,000 in interest on the home loan for this property. This entire amount can be deducted.
Step 6: Calculate Income from House Property NAV - (Standard Deduction + Interest on Home Loan) = Rs. 3,50,000 - (Rs. 1,05,000 + Rs. 2,50,000) = Rs. (-Rs. 2,05,000)
In this case, the income from the house property is negative, which means there is a loss from house property of Rs. 2,05,000. This loss can be set off against other heads of income, such as salary or business income, to reduce the overall taxable income.