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House Property Income

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Maliha Mim
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11 views14 pages

House Property Income

Uploaded by

Maliha Mim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Income from House

Property
Income from House Property
Prepared by
Md. Safiuddin
Lecturer, School of Business
Independent University,
Bangladesh
Scope of income from house property
• Annual value of property whether let out for commercial or
residential purposes
• The house property must be legally owned by the assessee
• Whether the house property is owned by two or more
persons, then only proportionate amount shall be considered
as income
• Where an assessee-owner receives any advance from the
tenant which is not adjustable against rent payable, the
amount so received shall be income from house property
• If the house property is used for personal purpose or business
purpose of the assessee, no such income shall be shown as
income from house property
Annual value
• Actual value of the rental income from house property or
municipal value whichever is higher one
• Mr Akram is the owner of a house which he let out at a
monthly rent of Tk 10,000. calculate the annual value when
municipal value of the house is
a) Tk 135,000
b) Tk 110,000
Partly let out house property
• When a part of the house is used by the owner for his own
purpose and the other part is let out the only income from let
out part is considered as income from house property.
• Mr. Rafi is the owner of a three-storied building at Banani. The
number of flat in each floor is 2. He resides in first floor and
let out the other floors at a monthly rent of 10,000 per flat.
The municipal value of the house is 750,000. what will be the
income from house property for Mr. Rafi?
Actual value (10,000*4*12) = 480,000
Municipal value (750,000/6*4) = 500,000
Higher one = 500,000
Admissible expenses

 Land development tax


 Local tax
 Insurance premium
 Interest on mortgage loan
 Ground rent
 Interest on borrowed capital: where the amount is used for
construction, repair, or renewal of the house property , the
interest so paid on such capital is an admissible expense [if
the loan is taken from sources other than bank or financial
institution, interest on loan will not be admissible]
Admissible expenses

 Interest on borrowing during construction: where the


property has been constructed with borrowed capital
from bank or financial institution, no income has been
earned during the construction period, the interest
payable during that period can be adjusted against
income generated from the property after construction,
in 3 proportionate installments for subsequent first 3
years
Admissible expenses continued…

 Vacancy allowance
 Uncollectible rent
 Repair and maintenance cost
 Repair expense
 Collection of rent expense
 Water and electricity bill
 Salary of darwan, security guard, pump-man, lift-man,
caretaker
Repair and maintenance expenses
• Repair and maintenance cost
For residential purpose
• 25% of annual value of house property
For commercial purpose
• 30% of annual value of house property
If actual repair and maintenance cost is less than
allowable amount, the unspent amount would have
to be shown as income.
Other provisions
• If the owner bears the tenant’s expenses, it shall be
deducted from the income from house property. The
actual rental value shall be after such deduction.
• If the tenant bears the owner’s expenses, it shall be
treated as income and thus shall be added with the
rental value of house property.
• If the house property is partly occupied by owner
and partly rent out, the admissible expenses shall be
proportionate (only for the rent out part), not for the
whole house.
• Mr. Rana is the owner of two houses: one at Dhaka and
another at Khulna. He has let out both the houses at an
annual rental value of 580,000 Taka and 600,000 Taka
respectively. Municipal value of these houses are 600,000
Taka and 570,000 Taka respectively. House at Dhaka was let
out for residential purpose and house at Khulna for
commercial purpose. Calculate the annual value of rental
income and repair and maintenance expense for the two
houses
Dhaka Khulna
Actual rental value 580,000 600,000
Municipal value 600,000 570,000
Annual value (Higher one) 600,000 600,000
Less: Repair and maintenance
Dhaka (25% of 600,000) (150,000)
Refer to the original data, if actual repair and maintenance for
house at Dhaka is 120,000 and for house at Khulna is 200,000.
what amount of repair and maintenance should be shown under
the head ‘income from house property’?
Ans:
Repair and maintenance for house at Dhaka will be lower of 25%
of 600,000 =150000 Taka or actual 120,000 Taka= 120,000 Taka .
Repair and maintenance for house at Khulna will be lower of
Taka 200,000 or 30% of 600,000= 180,000 Taka = 180,000 Taka
Other provisions
• If the aggregate monthly house rent amount from tenants
exceeds 25000 Taka, the assessee shall maintain a bank
account for the purpose of depositing rent of the house
property. Tenants may pay house rent to the landlord through
crossed cheque or may deposit directly to that bank account.

• TDS (5%) of house property income: where the tenant is the


government or any authority (corporation formed under any
Act or Ordinance), shall deduct 5% TDS as advance tax from the
rental amount. If any banking company or cooperative bank
established under any law, non-governmental organization run
by any foreign donation, any university, medical college, dental
college, engineering college, hospital, clinic, diagnostic center is
the tenant shall deduct 5% TDS.
Thank you

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