Scribd
Upload
4 views14 pages

1

Income from house property includes rental income and is one of the five heads of income for tax calculation under the Income Tax Act. Tax deductions are available for property owners, including a standard deduction of 30% on net annual value and interest on home loans, with specific limits based on the purpose and timing of the loan. Additional tax benefits are available under Sections 80C and 80EE for principal and interest repayments, respectively, with provisions for joint home loans and conditions for claiming deductions.

Uploaded by

insuregoa
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
4 views14 pages

1

Income from house property includes rental income and is one of the five heads of income for tax calculation under the Income Tax Act. Tax deductions are available for property owners, including a standard deduction of 30% on net annual value and interest on home loans, with specific limits based on the purpose and timing of the loan. Additional tax benefits are available under Sections 80C and 80EE for principal and interest repayments, respectively, with provisions for joint home loans and conditions for claiming deductions.

Uploaded by

insuregoa
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
You are on page 1/ 14

INCOME FROM

HOUSE PROPERTY
GROUP 1
Introduction
• The income arising out of a house property either in the form of a rental income or
on its transfer is referred to as ‘income from house property’.
• In essence, any property such as house, building, office, warehouse is treated as
‘house property’ under the Income Tax Act.
• The ‘Income from House Property’ is one of the five heads of income that is taken
into account for calculating the gross total income (GTI) of an assessee during the
year. However, there are several deductions allowed before the income from house
property may be taxed.
● For the income to be taxed under Income from House Property,
the following three conditions need to be met:

● The house property should be a building, land or an apartment


● The assesse should be the owner of the property, and
● The house property should not be used for business and
professional purposes.
Basics of House Property Tax
1. 30% of net annual value of the house property is allowed as deduction if property is let-out
during the previous year.
2. Actual interest incurred on capital borrowed for the purpose of acquisition, construction,
repairing, re-construction shall be allowed as deduction.
3. Interest incurred on capital borrowed for the purpose of acquisition or construction of house
property shall be allowed as deduction up to Rs. 2 lakhs. The deduction shall be allowed if
capital is borrowed on or after 01-04-1999 and acquisition or construction of house property is
completed within 5 years.
4. Interest incurred on capital borrowed for the purpose of reconstruction, repairs or renewals of a
house property shall be allowed as deduction up to Rs. 30,000.
How to calculate Income From House
Property
Determine Gross Annual Value (GAV) of the property

Reduce Property Tax

Determine Net Annual Value(NAV)

Reduce 30% of NAV towards standard deduction

Reduce home loan interest


1. Determine Income from house property
Different Methods of Calculating Property
Tax
1. Capital Value System (CVS):
2. Unit Area Value System (UAS)
3. Annual Rental Value System or Ratable Value System (RVS)

Property tax = base value × built-up area × Age factor × type of building × category of
use × floor factor.
Home Loan Tax Benefits under Section
80C – Principal Deductions
1. Section 80C deals with the principal amount deductions:

• For both self-occupied and let-out properties, you can claim up to a maximum of Rs.1.5 lakh
every year from taxable income on principal repayment.
• Stamp duty and registration charges may be included in it. However, it can be claimed only once.
• To claim it, you need to complete the construction of the property first. • You should not sell your
house within 5 years of possession to claim this deduction.
• If you sell your house within 5 years after possession, any deduction claimed will be reversed in
the year in which you sell it. This amount will also be added to your income for the year of sale.
Tax Benefits under Section 80EE
1. Allows you to avail tax benefits of up to Rs.1.5 lakh on the interest component paid
on a home loan
2. The benefit can be availed over and above the existing exemption of Rs.2 lakh
under Section 24(b)
3. The value of property must be less than Rs.45 lakh.
Home Loan Income Tax Benefits 2022
• For interest paid on home loans for affordable housing, an additional Rs.1.5 lakh
tax deduction under Section 80EE can be availed till 31 March 2022.
• This is applicable for loans that were received till 31 March 2024.
• The total income tax deduction that can be availed would now be up to Rs.7 lakh
for this time period.
Deduction for Joint Home Loan
• If the housing loan is availed by two or more persons, each of them is eligible to
claim a deduction on the interest paid up to Rs.2 lakh each.
• Tax can be deducted on the principal paid as well for an amount up to Rs.1.5 lakhs
each.
• However, all the applicants should also be co-owners of the property in order to
claim this deduction.
• Therefore, a joint home loan can give you greater tax benefits
Claiming Deduction on Home Loan
• The amount of deduction you can claim depends on the ownership share you have on
the property
• The home loan deduction can only be claimed from the financial year in which the
construction is completed.
• Submit your home loan interest certificate to your employer for him to adjust tax
deductions at source accordingly.
HRA & Deduction on Home Loans
Income Tax Act allows a deduction for HRA as well as interest paid on
the home loan.

Income Tax Act allows exemption in respect of HRA only if the


employee is staying in a rented house.

To claim tax exemption, an employee must be paying rent for the


house that he actually occupies.

In case an employee lives in his own house or does not pay any rent,
he cannot claim an exemption for HRA.
• Income Tax Act allows a deduction for interest on home loans paid
by an individual taxpayer. This deduction of interest is available for
every housing loan taken for purchase, construction, renovation or
reconstruction of a residential house.
The amount of tax deduction depends upon the purpose for which the
house has been occupied – i.e. Whether the house is occupied for one’s
personal use or for renting out to others. One can claim HRA exemption
as well as the deduction for interest on a home loan if one owns a
house but lives in a rented house.

Both these tax deductions are allowed only if the house one owns and
the house one lives in are at different locations and there is a genuine
reason for not living in one’s own house.
• Therefore, you can claim a deduction for HRA as well as interest
since your workplace is in a different city, or that your office is too
far from your house.
THANK YOU

You might also like