Calculation Income from House Property U/s Sec 24(b) for LET-OUT and having Home Loan Interest. Detailed Calculation of Income chargeable to tax under the head “house property” Rental income from a property being building or land appurtenant thereto of which the taxpayer is owner is charged to tax under the head “Income from house property”
Calculation of Income from House Property U/s Sec 24(b) for LET-OUT and having Home Loan Interest
- Basis of Charge [Section 22]
- Computation of income from house property
- Deductions for Calculation of Income from House Property
- Computation of Income from House Property
- Treatment of unrealized rent and arrears of rent [Explanation to section 23(1)]
- Co-owner and Deemed Owner
- Set-off of loss from House Property
II. Income under the House Properties
Basis of Charge [Section 22]:
Income from house property shall be taxable under this head if following conditions are satisfied:
హౌసింగ్ లోన్ ఉన్న వాళ్ళు వాళ్ళ ఉద్యోగ రీత్యా వేరే ప్రాంతం లో నివాసం ఉండటం వలన, వాళ్ళ స్వంత ఇల్లు అద్దెకు ఇచ్చి, వారు అద్దె ఇంట్లో నివాసిస్తున్నట్టు దానికి రెంట్ రిసీట్ ఇవ్వడం జరుగుతుంది.
అయితే ఇలా Housing Loan ఉంటూ, స్వంత ఇంటిని LETOUT ఇచ్చిన వారు, వారి యొక్క హోమ్ లోన్ గణన చాలా మంది సరిగా చేయడం లేదు
ఉదాహరణ
ఒక వ్యక్తి 2022-23 ఆర్ధిక సంవత్సరంలో 2.40 లక్షల హోమ్ లోన్ ఇంటరెస్ట్ పే చేయడం జరిగినది
అతను తన ఇంటిని ఏడాదికి 36 వేలకు అద్దెకు ఇచ్చి, అతను ఉద్యోగ రీత్యా వేరే ప్రాంతంలో అద్దెకు ఉంటున్నారు. ఏడాదికి అతను పే చేసిన హౌస్ టాక్స్ 1500. ఇతని విషయంలో హోమ్ లోన్ ఇంటరెస్ట్ 2 లక్షల కన్నా ఎక్కువ తో ఎలా చేయయవచ్చునో గణన
Gross annual value (House Rent Received on Own House) : 36000
(-) Municipal taxes paid during the year = 1500
Net Annual Value (NAV) = 36000-1500 = 34500
Deduction under section 24(a) @ 30% of NAV (Standard Deduction) = 10,350
Income from Let-out House Property = 24150
Deduction under section 24(b) (b) on account of Interest on borrowed capital = Rs 2,40,000 (For Letout Take full .. No limit of Rs 2 Lakhs Here)
Income from house property = 240000 - 24150 = 2,15,850
Income from House Property U/s 24(b) = Rs 2 Lakhs (Max Allowed)
ఇక్కడ అతనికి హౌసింగ్ లోన్ ఇంటరెస్ట్ గా 2 లక్షలు ఫైనల్ అవుతుంది
కానీ తెలియక చాలా మంది Rs 2,00000- 24150 = 1,75,850 వచ్చే లా మాత్రమే వేస్తున్నారు . కాబట్టి హౌసింగ్ లోన్ ఉండి, LETOUT ఆప్షన్ ఉన్నవాళ్ళు తమ గణన మరొకసారి సరిచూసుకొని లాభం పొందండి
Any interest pertaining to the period prior to the year of acquisition/ construction of the house property shall be allowed as deduction in five equal installments, beginning with the year in which the property was acquired/ constructed.
Deduction for interest on borrowed capital shall be limited to Rs. 30,000 in following circumstances:
Composite Rent:
If letting out of building along with movable assets i.e., machinery, plan, furniture or fixtures, etc. forms part of a single transaction and are inseparable, the composite rent shall be taxable under the head “Profits and gains from business or profession” or “Income from other sources”, as the case may be.
Income from house property shall be taxable under this head if following conditions are satisfied:
- a) The house property should consist of any building or land appurtenant thereto;
- b) The taxpayer should be the owner of the property;
- c) The house property should not be used for the purpose of business or profession carried on by the taxpayer.
Conditions for claim of deduction of interest on borrowed capital for computation of Income from House Property [section 24(b)]
Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under :
In case of Serial No. 3 above:
(a) The acquisition or construction of the house should be completed within 5 years from the end of the FY in which the capital was borrowed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
(b) Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.
(c) The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.
- i. the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. In case the house property is not occupied by the employee in view of his place of the employment being at other place, then his residence in that other place should not be in a building belonging to him.
- ii. the quantum of deduction allowed as per table below:
| Sl No | Purpose of borrowing capital | Date of borrowing capital | Maximum Deduction Allowable |
| 1 | Repair or renewal or reconstruction of the house | Any time | Rs. 30,000/- |
| 2 | Acquisition or construction of the house | Before 01.04.1999 | Rs. 30,000/- |
| 3 | Acquisition or construction of the house | On or after 01.04.1999 | Rs. 1,50,000/- (upto AY 2014-15) |
| Rs. 2,00,000/- (w. e. f. AY 2015-16) | |||
| 444 | Aggregate deduction of Sl. 1 and Sl. 3 of the table above shall not exceed Rs.2,00,000/- from the Financial Year 2019-20. | ||
In case of Serial No. 3 above:
(a) The acquisition or construction of the house should be completed within 5 years from the end of the FY in which the capital was borrowed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
(b) Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.
(c) The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.
Income Tax House Loan లో LETOUT ఆప్షన్ లో వడ్డీ 2 లక్షలు దాటి ఎంతైనా చూపించవచ్చు
అయితే ఇలా Housing Loan ఉంటూ, స్వంత ఇంటిని LETOUT ఇచ్చిన వారు, వారి యొక్క హోమ్ లోన్ గణన చాలా మంది సరిగా చేయడం లేదు
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ఉదాహరణ
ఒక వ్యక్తి 2022-23 ఆర్ధిక సంవత్సరంలో 2.40 లక్షల హోమ్ లోన్ ఇంటరెస్ట్ పే చేయడం జరిగినది
అతను తన ఇంటిని ఏడాదికి 36 వేలకు అద్దెకు ఇచ్చి, అతను ఉద్యోగ రీత్యా వేరే ప్రాంతంలో అద్దెకు ఉంటున్నారు. ఏడాదికి అతను పే చేసిన హౌస్ టాక్స్ 1500. ఇతని విషయంలో హోమ్ లోన్ ఇంటరెస్ట్ 2 లక్షల కన్నా ఎక్కువ తో ఎలా చేయయవచ్చునో గణన
Gross annual value (House Rent Received on Own House) : 36000
(-) Municipal taxes paid during the year = 1500
Net Annual Value (NAV) = 36000-1500 = 34500
Deduction under section 24(a) @ 30% of NAV (Standard Deduction) = 10,350
Income from Let-out House Property = 24150
Deduction under section 24(b) (b) on account of Interest on borrowed capital = Rs 2,40,000 (For Letout Take full .. No limit of Rs 2 Lakhs Here)
Income from house property = 240000 - 24150 = 2,15,850
Income from House Property U/s 24(b) = Rs 2 Lakhs (Max Allowed)
ఇక్కడ అతనికి హౌసింగ్ లోన్ ఇంటరెస్ట్ గా 2 లక్షలు ఫైనల్ అవుతుంది
కానీ తెలియక చాలా మంది Rs 2,00000- 24150 = 1,75,850 వచ్చే లా మాత్రమే వేస్తున్నారు . కాబట్టి హౌసింగ్ లోన్ ఉండి, LETOUT ఆప్షన్ ఉన్నవాళ్ళు తమ గణన మరొకసారి సరిచూసుకొని లాభం పొందండి
Computation of income from House Property
Income from a house property shall be determined in the following manner:| Particulars | Amount |
| Gross Annual Value | - |
| Less: Municipal Taxes | - |
| Net Annual Value | **** |
| Less: Standard deduction at 30% [Section 24(a)] | - |
| Less: Interest on borrowed capital [Section 24(b)] | - |
| Income from house property | **** |
Calculation of Gross Annual value [Sec. 23(1)] for Income from House Property
The Gross Annual Value of the house property shall be higher of following:- a) Expected rent, i.e., the sum for which the property might reasonably be expected to be let out from year to year. Expected rent shall be higher of municipal valuation or fair rent of the property, subject to maximum of standard rent;
- b) Rent actually received or receivable after excluding unrealized rent but before deducting loss due to vacancy
Deductions allowed for Calculation of Income from House Property U/s 24(b)
| Description | Nature of Deductions |
| Municipal Taxes | Municipal taxes including service-taxes levied by any local authority in respect of house property is allowed as deduction, if: a) Taxes are borne by the owner; and b) Taxes are actually paid by him during the year. |
| Standard Deduction[Section 24(a)] | 30% of net annual value of the house property is allowed as deduction if property is let-out during the previous year. |
| Interest on Borrowed Capital * [Section 24(b)] | a) In respect of let-out property, actual interest incurred on capital borrowed for the purpose of acquisition, construction, repairing, re-construction shall be allowed as deduction |
| b) In respect of self-occupied residential house property, 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. | |
| c) In respect of self-occupied residential house property, 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. |
Any interest pertaining to the period prior to the year of acquisition/ construction of the house property shall be allowed as deduction in five equal installments, beginning with the year in which the property was acquired/ constructed.
Deduction for interest on borrowed capital shall be limited to Rs. 30,000 in following circumstances:
- a) If capital is borrowed before 01-04-1999 for the purpose of purchase or construction of a house property;
- b) If capital is borrowed on or after 01-04-1999 for the purpose of re-construction, repairs or renewals of a house property;
- c) If capital is borrowed on or after 01-04-1999 but construction of house property is not completed within five years from end of the previous year in which capital was borrowed.
Deductions for interest on housing loan [Section 80EE]
Deduction of up to Rs 50,000 shall be allowed to an Individual for interest payable on loan taken for the purpose of acquisition of a house property subject to following conditions:- a) Loan has been sanctioned by Financial institution during the financial year 2016-17;
- b) The amount of loan sanctioned does not exceed Rs 35,00,000;
- c) The value of residential property does not exceed Rs 50,00,000;
- d) The assessee does not own any residential house property on the date of sanction of loan;
- e) Where deduction has been allowed under this section, no deduction shall be allowed in respect of such interest under any other provision.
Deductions for interest on Housing Loan [Section 80 EEA]
To purchase a residential housing property, one must take a loan from a housing finance company or financial institution.- The individual must not be a claimant of the deduction that comes with Section 80EE.
- The stamp duty of the residential property must be 45 lakhs or less.
- This must be a first-time purchase for the buyer. If he/she has any home registered with their name, they will be declared ineligible for the deduction of Section 80 EEA.
- The date to claim the house loan must be between April 1st 2019, to March 31st 2022.
- In metropolitan cities, the carpet area of the residential property must be more than 645 sq ft or 60 meters.In other cities, the carpet area of the residential plot must not be more than 968 sq ft or 90 meters.
Computation of Income from House Property U/s 24(b)
| S. No. | Property Type | Gross Annual Value of the property | Deduction for municipal taxes | Net Annual Value of the property | Standard Deduction | Interest on borrowed capital |
| 1. | One self-occupied house property | Nil | Nil | Nil | Nil | Deduction for interest on borrowed capital is allowed up to Rs. 30,000 or Rs. 2,00,000, as the case may be. |
| 2. | House property could not be occupied by the owner due to employment or business carried on at any other place | Nil | Nil | Nil | Nil | Deduction for interest on borrowed capital is allowed up to Rs. 30,000 or Rs. 2,00,000, as the case may be. |
| 3. | Let out property | To be computed as per provisions of Section 23(1) | Allowed on actual payment basis | Gross annual value less Municipal taxes | 30% of Net Annual Value | Entire amount of interest paid or payable on borrowed capital shall be allowed as deduction. Pre-construction interest shall be allowed as deduction in 5 annual equal installments (Subject to certain conditions). |
| 4. | More than one-self occupied property | Only one property selected by the taxpayer will be considered as self-occupied house property and all other properties shall be deemed to be let-out for the purpose of computation of income under the head house property. | ||||
| 5. | A self-occupied property let-out for the part of the year | The house will be taken as let-out property and no concession shall be available for the duration during which the property was self-occupied. | ||||
| 6. | One part of the property is let-out and other part is used for self-occupied purposes | Each part of the property shall be considered as separate property and income will be computed accordingly | ||||
Composite Rent:
If letting out of building along with movable assets i.e., machinery, plan, furniture or fixtures, etc. forms part of a single transaction and are inseparable, the composite rent shall be taxable under the head “Profits and gains from business or profession” or “Income from other sources”, as the case may be.
On the other hand, if the letting out of building is separable from letting of other assets, then income from letting out of building shall be taxable under the head “Income from house property” and income from letting out of other assets shall be taxable under the head “Profits and gains from business or profession” or “Income from other sources”, as the case may be.
However, the loss which couldn't be set off can be carried forward for set-off in subsequent years. It can be carried forward for 8 Assessment years for set-off.
Restriction on set off of loss from House Property
If the net result of computation of income under the head "House Property" is loss then such loss can be set-off against any other income upto Rs. 2 Lakh in any assessment year.However, the loss which couldn't be set off can be carried forward for set-off in subsequent years. It can be carried forward for 8 Assessment years for set-off.
Useful Income Tax Reference Articles
