Income from House Property is clubbed with the total income while filing Income Tax Return. One of the most common query i received is on how to calculate income from House Property. Income from House Property arises when you have a property which is Let out Property i.e. you receive Rental Income from such property. Though this head is titled as Income from House Property but it is not necessary that you only gain income from House property. In case of Home Loan, Income from House Property can be negative i.e. you may incur Loss from Let out property when Home Loan Interest outflow outweigh the Rental Income. In another scenario, in case of Self occupied property for sure you will incur Loss from Self occupied property as Gross Annual Value of Self occupied property is Zero subject to max limit under income tax act. Any loss from self occupied property is also reported under Income from house property. We will discus loss from self occupied property towards the end of this post. Lets check out calculation of Income from House Property in case of Let out property.
Calculation of Income from House Property is very complicated in case you have multiple properties either within city of residence or in different cities. As per Income Tax department, Basic thumb rule is that if you have 2 properties then 1st one is considered as self occupied and 2nd one is Let out property. It is your choice, which one you declare self occupied and by default 2nd one is Let out Property. Through intelligent tax planning, “Income from House Property” can help you save income tax on Mortgaged Let out property. In short, if you have availed Home Loan on Let out property then you can claim income tax deduction on interest component at actual value i.e. actual interest paid and claim Loss from Let out property. Please note that this section/head is not applicable for clubbing income from letting out land parcel or vacant plot. Income from Vacant plot is clubbed/taxed under Income from other sources or Business Income. Only exception is land which form part of building like courtyard etc which can be charged under Income from House Property. Income from any structure like residential/commercial unit including shop,godowns, office, agricultural land, manufacturing unit etc which can be rented out is clubbed under Income from House Property. If the property is used for own business or profession then it cannot be taxed under Income from House Property.
Some of the most common scenarios of Income from House Property which is Let out are
1. You own a property but it is located in different city i.e. you stay in city A and property is in city B
2. You own 2 properties in same city. In this case, it is beneficial to declare property on Home Loan as Let out and 2nd one as self occupied. It is your choice to declare a particular property as Self occupied or Let out. In case both properties are on Home Loan then the property with max interest outflow can be declared as Let out property and other one as self occupied property.
3. Though it can be disputed but if you have single property in same city of residence then you can rent out your property and declare it as Let out property. You can stay on rent near to your workplace. You can also claim HRA in this case. Only catch is that you need to prove that your workplace is far from from your own property.
Rental Income from House Property
Calculation of Rental income is most tricky party. In order to save tax, a tax payer would like to declare lowest rent but it is advisable to calculate rental income in fair and transparent manner as per income tax act. In many cases, i observed that my clients declared 2nd property as vacant therefore zero rental income. Unfortunately, even if the property is vacant you need to declare notional or fair rental value of property for Income tax purpose. Income from vacant house can be declared under Income from other sources in ITR whereas self occupied and rented property is declared under head Income from House Property. Rental income is also loosely referred as Net Annual value of House Property. There are 4 standard methods to calculate rental income. I will explain with an example for easy calculation
A = Actual Rent Received: For let out property, actual rent received is as per agreement between owner and the tenant. Any payment by tenant on behalf of owner is also clubbed under Actual Rent Received. Example: Tenant is paying a rent of Rs 15000 per month to owner for property A
B = Fair Rent: It means how much rental income a similar property in vicinity can fetch with similar facilities and amenities. Example: Fair Rent for Property A is Rs 17000 per month
C = Standard Rent = Rent fixed under Rent Control Act: States like Maharashtra have Rent control act, under which rent specified under Rent Control Act is fixed even if is meager amount. Example: Standard Rent of Property A is Rs 12000 per month
D = Municipal Value: It is similar to circle rate or guidance value. Rental value is fixed by local municipal corporation or municipal committee. Example: Municipal value of property A is Rs 10000 per month
After calculating above mentioned values, Notional Rental Income from House Property can be calculated as per following formula as mentioned in income tax act.
Z = Higher of B or D i.e. Higher of Fair Rent Value or Municipal Value. In this case it is higher of Rs 17000 or Rs 10000 = Rs 17000 per month
Y = Expected Rent = Lower of Z or C i.e. Lower of Rs 17000 or Rs 12000 = Rs 12000 per month
Gross Annual Value of Property = Higher of Expected Rent or Actual Rent Received = Higher of Y or A i.e. Rs 12000 or Rs 15000 = Rs 15000 per month or Rs 1,80,000 p.a.
Therefore in this case, Actual Rent Received is Gross Annual Value of Property. Though it may not be true every time. In most of the cases, Actual rent received is Gross Annual Value of Property for the purpose of calculation of Income from House Property.
If in your area, any particular value is not available or not declared then you can take it as Zero.
Net Annual Value is Gross Annual Value minus Municipal taxes like property tax, sewerage tax etc.
Imp Point: For calculation of Net Annual Value, the Municipal Taxes for Income from House Property will be considered as Zero if it is not paid by the owner of the property. For e.g. If municipal taxes is paid by the tenant then it will be clubbed under Actual Rent Received therefore will be Zero and Net Annual Value will be same as Gross Annual Value.
Assuming Rs 10,000 as Municipal taxes per annum paid by owner in this case. Net Annual Value = Rs 1,80,000 – Rs 10,000 = Rs 1,70,000
Imp Points: If the property was let out for part of year and vacant for rest of the year. In this case, assuming Actual rent received is less than value of Y. Only for this scenario actual rent received will be considered as Gross Annual Value of Property even though it is less than Y.
Standard Deduction on Income from House Property
After calculating Net Annual Value of Property, we need to adjust Standard Deduction from Net Annual Value. Income Tax Act provide 2 types of Standard Deduction from Net Annual value for calculation of Income from House Property (Let out property)
(a) Deduction on Repair and Maintenance: 30% of Net Annual Value is allowed as Standard Deduction towards the repair and maintenance of property irrespective of actual expenditure. This is applicable only for Let out property not for self occupied property.
(b) Deduction on Home Loan Interest (Interest on Borrowed Capital): For let out property, Actual Interest paid on Home Loan during Financial year is allowed as deduction for calculation of Income from House Property. Besides Home Loan, if the loan is availed for repair, construction, extension or renewal of property, the deduction on interest component is allowed at actuals. Any brokerage or commission for Home Loan is not allowed as deduction.
Assuming actual interest paid during Financial year is Rs 3,00,000. Therefore Income from House Property will be calculated as follows
Income from House Property = Net Annual Value – 30% of Net Annual Value – Actual Interest Paid on Home Loan
Income from House Property = 1,70,000 – 30% of 1,70,000 – 3,00,000 = – 1,81,000
In this case there is a loss of Rs 1,81,000 from let out property. This loss can be adjusted against income in ITR under the head income from house property thus it will reduce income tax liability.
Self Occupied Property
In case of Self occupied property, Gross annual value is NIL as property is not on rent. Net Annual Value is also NIL as you cannot deduct Municipal Taxes for self occupied property.
Standard deduction towards repair and maintenance is also not allowed. You can only avail deduction towards Interest on Borrowed capital i.e. Home Loan Interest subject to max limit of Rs 2,00,000 (Increased to 2,00,000 in budget for FY 2014-15 from Rs 1,50,000 in FY 2013-14). Considering the same example and assuming same property A is self occupied instead of being let out. Actual interest paid is same Rs 3,00,000. Income from House Property for self occupied property can be calculated as follows
Income from House Property = Net Annual Value – 30% of Net Annual Value – Interest Paid on Home Loan (Subject to max limit of Rs 2,00,000 in case of Home Loan and 30,000 if the loan is availed for repairs, renewal etc)
Income from House Property = NIL – 30% of Net Annual Value i.e. NIL – Interest Paid on Home Loan (Subject to max limit of Rs 2,00,000 or 30,000 as the case may be) i.e. Rs 2,00,000 (Assuming Home Loan scenario)
Income from House Property = -2,00,000
In this case there is a loss of Rs 2,00,000 from self occupied property. This loss can be adjusted against income in ITR under the head income from house property thus it will reduce income tax liability.
The plus point of self occupied vs Let out property is that you can claim deduction on principal component u/s 80C subject to max limit of 1.5 lakh u/s 80C.
In case of Joint ownership, Both the owners can claim gain or loss from house property i.e. income from house property is divided in proportion of ownership.
Hope you liked the post. I tried to cover all possible scenarios and explained the concept of income from house property in simplistic manner. For any queries and clarification, you may post your comments. You can also share this post with your friends and family members through social media icons.
Copyright © Nitin Bhatia. All Rights Reserved.
Hi Nitin,
Informative but not easy to digest. But I guess, the nature of the subject matter is such! I can imagine the effort you have put in drafting this post. Thank you so much.
I have just one query in respect of self occupied property:
Do you mean that over and above the Rs 2 L interest component deduction and Rs 1 Lac principal component deduction, I can deduct further Rs 2 L as loss (negative Income from House) ? Is my understanding correct ?
For example, if I have self occupied property, I can then deduct a max of Rs 4.5 Lacs straight away from the income ? (Assuming I am paying 1.5 L interest and 1.5 L principal on the home loan)
A clarity would be highly appreciated.
Many thanks.
Sorry, not 4.5 L above but 5.5 Lacs (2 L Interes + 2 L Loss + 1.5 L interest)
Thanks for liking the post. The total interest deduction for self occupied property is 2 lakh therefore deduction mentioned by me in this post is same as you mentioned but not over and above as allowed under IT act. I only highlighted how it is calculated and under which head it should be claimed in ITR for the benefit of readers.
In your example, you can claim 1.5 lakh u/s 80C for principal component assuming there is no other investment u/s 80C and 2 Lakh interest which is technically “Loss from Self occupied property” as i explained in this post therefore total 3.5 Lakh deduction.
Hi Nitin,
Above post was very informative, Could you also advice on below queries
I have 2 properties in same city, property A is self-occupied and home loan is completed on same
This year i have bought new property and home loan started on June 2014 while the possession is expected in May 2015
My wife and myself are the co-owner and co-borrower of the property, since wife is homemaker i pay the full EMI.
So my query is
1)Can i claim the intrest paid on the property under 24US while the income from the property can be transfered to my wife bank account.
So the income from this property will not be added to my tax calculation?
2) Also how should i claim the interest paid before the possession and what all documents will be required for same.
Thanks,
Swapnil
1. Not possible. Rental Income is divided in proportion of ownership in property. If EMI is being paid by you then you can claim 100% Interest deduction
2. Interest before possession is Pre-EMI interest and can be claimed in 5 equal installments starting from FY in which the possession is received. You need income tax certificate issued by Home Loan provider.
Hello Mr Bhatia,
I have taken HOUSE LOAN for under construction building in March 2013 and PRE EMI started in April-13 and given 4 installment of payment . I will be getting possession in Dec-14. I will be renting out the room in FEB-14. What are the tax benifits.
Any interest paid till Dec’14 can be claimed as Pre-EMI interest in 5 equal installments from FY 2014-15 till FY 2019-20.
For let out property, you can claim loss from let out property. Please go through above post. I have explained, how to claim loss from let out property.
Hello Mr Bhatia Sir,
I have applied for home loan on Last year 2013 and got approved on November 2013 and they release the installementson Jan1 2014and i m paying the emi ( Principal + intersest for released amount) now 20k and house is under construction and i will supposed to get possession on June 2015
1)Please clarify me whether I am able to show the interest and principal paid for 2014-2015 this year for tam exemption for current financial itself?
In which section I need to claim
2) If i am not able to clainm this year, whether able to claim next year and how to claim.
Thanks in Advance
Regards,
Sriram G
1. This financial year you cannot claim any tax deduction as you will receive possession only in June’15 i.e. FY 2015-16
2. Any principal paid before possession cannot be claimed as tax deduction. Interest paid before possession i.e. Pre-EMI interest can be claimed in 5 equal installments starting from FY in which you receive the possession.
Hi Nitin,
I have applied for home loan in PNBHFL and I got a loan details. In this its mentioned as “In Partly disbursed cases, pre-emi interest would be payable on total disbursement amount till the time loan in fully disbured”. I asked the bank to go for full EMI, but they say since your flat is in under construction all banks will only calculate your emi in pre emi stage untill the possession. So please let me know if this is right?.
Regards
Manoj
Hello Nitin – Thanks for directing me to this post and thanks for responding to all the comments diligently.
I have 2 query that does not get answered above.
1. In case of Let out property, If possession is received mid year (e.g. Dec 14), can the interest paid from Apr 14 to Dec 14, be claimed u/s 24 for FY 14-15 or is it only post Dec 14.
2. In the same example, if possession of a let out property is received in Dec 14, should the rental income be calculated as shown by you for full year or only from Dec 14?
Thanks
Ashish
1. Interest paid till possession is Pre-EMI interest and after possession you can claim on actuals.
2. Only from Dec’14 as property can generate income only after the possession is received.
Hi. Greetings…Could you please answer my following queries. I have 1.5 Lacs as the interest that I paid before completion/possesion of my house (which happened in 2012). Now I have following specific questions.
1). I had rented my above house for 3 months in this FY. Can I claim 20% of 1.5 Lacs Pre-EMI interest along with the interest that I paid in this FY. Note that the concern is over renting this house. Lets say I have 2.3 Lacs as the interest for this FY. Can I add another 30 K as the pre-EMI interest and claim total of 2.6 Lacs as the total interest in this FY. Of course I will be declaring the rental income for 3 months that I have received for this house. Or is it that the max cap in such case is Rs. 2 Lacs only. Please clarify.
2). In case I dont claim 20% Pre-EMI interest in the initial 2 years (after the possesion), can I claim total of 60% Pre-EMI interest in the third year. To rephrase, do I need to claim only 20% in each year or can I claim all 100% in the fifth year (following the completion).
3). If not, does that mean that for the first two years (for which I did not claim the Pre-EMI interest), the benefit is lapsed and I cannot get Tax Benefit on that amount.
Thanks for your time and help.
Regards
Dr. Dheeraj
To answer your queries, i need to calculate exact amounts but generally speaking
1. You can claim 1/5th PRE-EMI + Interest paid after possession. This limit is 2 lakh for self occupied and there is no limit if property is let out
2. You cannot claim
3. In case of unclaimed Pre-EMI interest, Tax benefits will lapse at the end of FY.
Dear Nitin.
Thank you very much for your prompt and “to the point” reply. I would definitely recommend your name to my friends for any Tax related consultation.
Regards
Dheeraj
Hi Nitin,
Thank you for the informative article.
I have a query:
I have a self-occupied house for which I have taken a loan & pay 3.5 lacs interest yearly.
I have another property which I have given on rent and I earn 1.5 lacs rent from the same.
Is there a way I can claim the entire loss of 3.5 lacs that I pay for interest on self-occupied house or is it just 2lacs that I can claim and 1.5 lacs (rent received) will be treated as income which would essentially mean a deduction of only 50,000 (2 lacs interest – 1.5 lacs rental income).
thanks,
Abhinav
Please let me know whether both properties are in same city or different city.
Both properties are in the same city
Within same city, you have flexibility to show any 1 property as self occupied and 2nd one will be by default let out. I suggest you to declare existing rented property as Self Occupied and existing self occupied as Let out property. It will solve your problem.
Thank you very much for your reply.
Dear Nitin ji,
I owned 1 bedroom flat at Delhi (declared as self occupied)
Second house at Lucknow (shown as let out)
I am staying with my mother at lucknow (owned by my parents only) and my working place is also in Lucknow..
Can i claim interest reabate on both houses (one at delhi & second at Lucknow)
and HRA rebate by paying rent to my mother (owned by my parents) in Lucknow (which is also my working place).
regards
Joydeep chakraborty
As you are staying in Lucknow therefore you cannot declare property in Delhi as “Self Occupied”. Secondly, you should have valid and logical reason why you are not staying in your own property in Lucknow.
In my opinion, you cannot claim HRA. Your Lucknow property should be self occupied and property in Delhi can be declared as Let Out.
I have 2 flats in mumbai , bought on loan, which i have given out on rent. As my office is at a distance from both houses, i have taken a house on rent closer to my office. Can i
– Claim loss on housing income for the interest paid on both the flats
– Claim HRA income tax benefit for the flat i have taken on rent
1. You can claim after adjusting rental income
2. You can claim
Hi Nithin,
For let-out property, in case there is no home loan and net annual income is say 120000 after 30% of repair and maintenance then how much I’ve to pay as Income Tax from Income under House property for amount 120000..?
Regards,
Sandeep
Please check my following post
https://www.nitinbhatia.in/personal-finance/income-from-house-property/
Hello Sir, I have own property in Pune on home loan, just taken the possession. But due to service I live in Mumbai on Rent (160 Kms from Pune). I am taking benefit of rent paid in I-Tax. Can I declare my own property in Pune as Let out Property and take 100% benefit of Interest portion of my home loan? Of course I will declare income from this house property as mentioned in this article. Pls confirm.
You can declare Pune property as let out.
Dear Mr. Nitin,
Presently I am staying in my own house. Can I let it out & stay on rent near the school of my child which is approx. 5 km. away from my own property. My office is approx. 10 km. from own property & approx. 6 km. from the school. By doing so,cCan I avail Tax benefits like HRA & advantages of let out property as mentioned in your post.
Thanks & Regards,
Rakesh
It is subjective but i don’t think so that you will be able to justify the same to IT department.
Hi Nitin,
I have a property in Kolkata for which I have taken a home loan along with my wife.
Currently, I am living in Bangalore in a rented property. The flat in Kolkata is vacant.
I have few queries:
1. Can I declare my Kolkata flat as let out by choosing to declare rental value in order to avail unlimited tax benefit on interest under section 24 ?
2. What documents will I have to provide given there will no rental agreement ?
3. Can I take the benefit of HRA even after declaring my Kolkata house as let out ? I believe this is possible in case of self occupied but not clear about let out.
4. Currently, EMI is getting deducted from my account. Then how my wife can avail tax benefit. Do we also need to define share of EMI we are paying ? If yes, then which document is required to show this share as the same is not mentioned in sale agreement.
5. If total annual interest is 3.5 lakhs, then me and my wife both together can claim tax benefit on interest upto 3.5 lakhs or we both can individually enjoy tax benefit on interest upto 3.5 lakhs(i.e. total 7 lakhs). Pardon if it sounds silly :D.
Thanx,
Vishal
1. Yes
2. You can declare notional rent as i explained in my post. You don’t need any documents
3. Yes
4. Both should contribute to EMI. Better to open joint account for EMI
5. 1.75 Lac each
Hi Nitin
My cousin has a property in Hyderabad which is let out and a property in Mumbai which he stays in. Both have home loans but the home loan for Mumbai has a bigger interest burden. Is it possible to declare they hyderabad property as Self occupied ( say by his parents) and the Mumbai property as deemed let out
Unfortunately it is not feasible.
Only possibility is if his property in Mumbai is far from office. In this case, he has to pay rent to someone and claim HRA. In this case he can declare both properties as Let Out and can also claim HRA which is best possible scenario.
thanks for the reply Nitin. 1) What if the Hyderabad property is not let out and it is self occupied ie the scenario is that both Hyderabad property is self occupied by his parents and the mumbai house by him. In that event can he claim the hyderabad property as self occupied and the mumbai property as deemed let out and claim full interest on the Mumbai property? and 2 lac on the hyderabad property.
2) Also if he has 3 properties ie 1 in hyderabad and 2 in Mumbai. Then does he have the option to decide which property in mumbai can be treated as self occupied and then treat both the hyderabad property and 2nd house property as deemed let out and claim full interest on those 2?
1. Not possible. If it is not let out then he needs to consider notional rent as i explained in my post. Under any condition, it cannot be self occupied.
2. That’s correct, any proper property in mumbai can be declared as let out and 2nd property in Mumbai will be by default self occupied.
Hi,
Can i put Pre-Emi Interest divided by 5 as -ve number in SARAL1 under “Income form House Property”.
Yes, you can put it as Loss from let out property but check the calculations.
Hi sir,
I am going to purchase a residential plot. for this I am taking home loan from a nationalized bank. My query is whether i can take advantage of income from house property ( self occupied ) or not? if not then what needs to be done so that i can take advantage of “income from house property ( Rs 200000/- exemption)”..
It depends whether you are availing plot loan or composite loan. Please check my
following posts for difference in these 2 types of loan and income tax benefits available.
https://www.nitinbhatia.in/home-loan/7-facts-you-should-know-about-land-loan/
https://www.nitinbhatia.in/home-loan/composite-loan-two-in-one-home-loan/
Sir one last query. …”How many times a person can take home loan to take advantage of income tax”. Means is there any limit for purchasing property through home loan as per income tax laws or a person can take so many home loans but he can take income tax benefit on only one loan on property.
You can take multiple Home Loan provided your source of income is sufficient to pay Home Loan EMI’s.
Sir,
I have two houses in Kolkata which I have purchased with self finance.
The first property is in my name.
The second property has been purchased jointly in my name and my wife’s name. My wife is a co-buyer (second name in deed)
My wife is working. So while filing tax return, does my wife also have to declare about the second house as she is a co-owner not the primary owner?
I am working in Mumbai but both my properties are in Kolkata. Can I consider one property as self occupied for tax computing assuming my parents stay in the first house. My PAN card has address of Kolkata.
Also I have purchased and registered my second property in mid of Feb 2015 so do I need to show the second property in income tax return this year?
You have not mentioned whether your wife stay in Kolkata or Mumbai. Secondly, whether either or both properties are on Home Loan or not.
Sir, my wife who is working owns one bedroom flat (for which she has taken a loan and paying interest to the bank) and a small shop. we live in our own flat. Both are unoccupied i.e. not let out. Kindly tell how to fill up income from house property in this case? Unfortunately both are bad investments.
She needs to declare notional rent and claim gain/loss from let out property. Please check my post on this page for more details.
Sir, i have query about calculatio of income from house property. suppose one has two properties . one is let out and other one is deemed to be let out. however interest on the deemed let out property is more so can one show the first property which is actually rented out as self ocuppied and second property as deemed let out. also can interest for the financial year in which posession is taken plus 20-% of pre posession interst can be claimed on deemed let out property or is it applicable only for self occupied property.
As you are not staying in either of the city therefore you cannot declare any of the property as Self Occupied. Both will be let out only. Pre EMI interest can be claimed for both let out and self occupied property.
Sir. Thank you very much for ur reply. One more query I have. Self and wife are joint owner of a property. However no percentage of share in property mentioned in registry. I am earning and paying emi. Wife does not have any income. While filling itr form I want to show my share as 100% but system is not accepting saying wife share cannot be 0%. I have also seen some judgment on internet where such provision has been allowed by court. As I am paying emi and I want to avail benefit of Loss from house property in my itr form for complete interest payment, please tell me how should I should proceed. Is there anyway my wife can give affidavit mentioning her sharee say as 1% or so and then I can claim loss from house property. Sorry to bother u again..
You can declare that your wife is not claiming tax deduction.
Dear Sir,
I had purchased a house property in Nov 2011 for which took the home loan in Dec 2012.
I got the ownership of the property in Jan 2015.
I am living in another property and claiming HRA for the same.
Firstly, it is said the construction of the House property should be completed within 3 years from the FY in which loan was taken to avail interest deduction of Rs. 2L.
can i claim deduction of interest paid till March 2014 from PY 14-15 in 5 equal installments.
Also can i claim deduction upto Rs. 2L from PY 14-15.
if i dont want to claim deduction of pre-possession interest amount from PY 14-15 but rather want to claim from PY 15-16, can i do so.?
1. Rule of 3 year completion is only applicable for self occupied property
2. Pre-EMI interest is calculated till date of possession. It can be claimed in 5 equal installments.
3. For FY 2014-15, you can claim interest from date of possession till Mar 31, 2015 subject to max limit
4. Yes but it cannot be carried forward i.e. you can claim 2nd trench of Pre-EMI interest in FY 2015-16.
Dear sir,
I have 2 properties both on home loan, one is self occupied and the other is ready but possession/ registration not done yet. I am claiming the interest on self occupied one upto 2 L. My question is regarding the other one. Is there any way I can claim the tax benefit on the 2nd property for the FY 2014-2015 for the interest paid?
You cannot claim any tax deduction till you receive possession.
Halo sir My Property was self occupied for 10.5 months and let out for 1.5 months. During 10.5 months my interest on home loan was above rs 2lakh. how to calculate Income tax rebate? please help
On pro rata basis.
Dear Sir,
One of my close relatives has received a letter from the income tax in connection to rental income. The actual scenario is that the rent is in dispute and the assessee has not accepted the rental income . So can the income tax department take into consideration this income as actually received by the assessee ?
Yes. It is referred as Notional Rent.
Dear Sir,
I had three house property in different cities as given below:
1. Flat at Delhi purchased thru house loan in 2003 -HBA interest @ 10.1 % floating, Interest approx 25000 FY 2015-16
(Till now I m showing it self occupied )
2. Flat at Alibag ( Place of posting and I m living at present in this house )purchased thru house loan in 2011 – loan repaid fully.
( Till now I m showing this as let out -since my company is paying BAER to me and I m living in this property .)
3. A house build by self at kanpur ( No loan -My parents are presently living there .)
I m not showing this property in ITR for AY 2015-16.
As my wards are living at Navi mumbai for education in a rented accommodation ,I m getting HRA for Mumbai and BAER {Bachelor accommodation expense reimbursement (fully taxable) } at alibag for myself.
Now please guide me
1.Is it mandatory to show all residential properties in ITR ?
2. How to calculate Income from house property now for FY 2015-16 ?
Regards ,
Gulshan
I need more details to answer this query.
I am a psu emplyee and gross salary is approx 20 Lacs.
Hi Nitin,
I have a query for annual rental income. Could you please help me out.
I have a property which was self occupied by me from April till June this year. And it is now rented out from July for a monthly rent of Rs.6500/-. For the purpose of income from house property, I have declared the rental income as Rs.58500/- (6500*9).
However, the tax department in my company is asking me to declare Rs.78000/- (6500*12) as rental income for this financial year. And I think this is incorrect. I’m claiming HRA for my current residence ( own and rented properties are in same city Hyderabad) from July this year.
When I have asked them about the same, they said a notional rent will be taken into calculation for April-June period. I suppose this can be taken only if the property is vacant. But in my case, it is self occupied.
Could you please help me here in getting the actual rental income that I need to declare.
Thanks
Maheswari
You mentioned whether you claimed HRA from April to June.
Yes. I have mentioned that I have not claimed any HRA for April to June period.
And thank you sooo much for responding to my question….
Rental income should be for 9 months as the property can be declared self occupied for 3 months. Moreover HRA is also not claimed which suffice your stand.
Thanks for the reply Nitin. This post was very helpful for me.
Looking forward to see many of such kind from you….
Hi NItin,
Read your post and found to be very useful, however please advise what should be my calculation in the below Scenarios.
I am currently occupying a 2BHK flat which was on loan with a yearly interest of Rs. 1.25 Lacs. However I paid this loan in July 2015 and borrowed an additional loan of Rs. 1 Crs. to buy a 3 BHK in August 2015. The interested for 1st year will be appx Rs. 4.00 Lacs. I got the possession of this flat in September 2015 and I will be shifting to the new flat very soon. Both the Flats are in the same city. Can you please guide me how can I use this scenario for reducing my tax liability.
I need to check complete details and calculate.
The details with value are as follows:
Property A – Loan prepaid and now it on rent with an annual rent of Rs. 1.80 Lacs. This is my first home which i am not going to sell.
Property B – Loan taken of 1 crs, Appx interest per annu Rs. 9.00 Lacs. It is in the same city and I will be moving to this property in Dec 2015. This is y second property. Please advise can i take full interest exemption on this property
You cannot claim full interest exemption
Hi Nitin,
I’m a salaried employee and I’m already claiming tax benefit on home loan interest from my salary.Wanted to know if I can again claim tax benefit while calculating annual income for let out property as posted in the above article.
If yes can I claim benefit for previous years which I’ve missed.
It depends on the status of property. Now you cannot claim tax deduction for previous year if you have already filed the ITR.
Now the property is rented out and I’m already claiming tax benefit on the interest of home loan from my income. Can I again include it for calculating annual income from house property?
Yes
I have given my house for Lease for 8lacs for a period of 3 years. There is no monthly rental that is received from tenants. After 3 years I will have to return this 8 lacs to the tenants and end the lease. I have a home loan and I have used this lease amount to partially pay the home loan. Now do I have to declare any rental income while declaring tax and taking benefit for interest paid on housing loan. Please advise
Sorry i could not understand your query. As i understand there is no monthly rental and 8 lac is sort of deposit which you will return after 3 years. I am not sure what is rental income out here. Prima facie, you are not earning any rent from this property. To claim home loan tax deduction you need to declare notional rent and claim tax benefits on principal and interest component.
Hi, I have taken a home loan for a property the construction of which got over in Oct 2015. Am I eligible for tax exemption for the EMI paid during Apr to Sep 2015. The home loan commenced in November 2014.
You have not mentioned when you received possession of same.
Hello Nitin ji,
I have purchased a flat (self occupied) and while paying the stamp duty I paid excess 30,000. I have proof documents for the same. Now can I claim it as loss?
The stamp duty rule vary from state to state. I request you to share your state of residence.
Maharashtra
You cannot claim loss. I suggest you to claim refund of excess stamp duty paid. Please check following link
https://appl1igr.maharashtra.gov.in/refund/Home.aspx?query=345
Hello Nitin ji,
I have purchased a flat (self occupied) and while paying the stamp duty I paid excess 30,000. I have proof documents for the same. Now can I claim it as loss? state of residenceis Maharashtra.
1) Is “completion certificate” the same as “handover document”? I recently took handover of my flat that was under construction for last 3 years (its less than 3 years from the end of the FY in which loan was applied for). I signed a handover doc and I have a scanned copy of “handover docs” from the builder. Does that suffice to start availing the tax benefits prorated over 5 years. Or do I need some kind of “completion certificate” from the builder?
2) I took possession in Nov 2015. After furnishing I expect it to be rentable only in Feb 2016 (if I get a tenant, its not like a tenant is waiting out there :-)). For the year in which possession is taken, do I need to show notional rent income for the unrented months (Apr 2015 – Jan 2016)? Or do I just show the actual rent (Feb 2015 – Mar 2015)? If I dont get a tenant at all in FY 2015, then how does the answer change?
1. Completion Certificate is issued by the govt authority. As you have received possession therefore now you can claim Pre-EMI interest.
2. You have to show notional rent from Dec’15 to Mar’16 but it is not necessary. If your property is not rented then you can always show that it was under furnishing. After receiving possession, you can show property under furnishing for 10-12 months.
Sir, I have take house on loan and planning to give the same on rent. Will the Rent be counted as my income and liable for tax? Pls guide
Rent will be your income and calculation will be as i explained in my post.
Question: In case of let out property..can we claim deduction on principal component u/s 80C subject to max limit of 1.5 lakh u/s 80C. or not? pls guide
yes but only for 1st home loan.
Dear Sir, I am a Government Servant posted at Delhi staying in Government Quarter thus not getting HRA.. I purchased house with loan at Jaipur (native place) with rs 6000/-PM. My loan repayment are Principal: 94000/- and interest 454000/-. Would i Be getting full interest part exemption for tax. Pls guide.
As the Jaipur property is let out therefore you can claim tax deduction on 100% home loan interest.
Dear Nitin Ji, first of all many thanks for this nice informative blog.
I am an NRI having two flats in India, first one at Pune (let out Rs. 15,000/pm) and second one at Kolkata (got possession in July 2015 and currently vacant).
Can I declare the second flat at Kolkata as self occupied (not sure since I am NRI) in my ITR. Please guide.
I am assuming you are not staying in Kolkata therefore you cannot declare it as self occupied. If you travel to india frequently and stay in kolkata then subject to certain conditions it can be declared as Self Occupied.
Hello Nitin Ji, thanks for a wonderful writeup.
I have a query related to same, I have two houses in Hyderabad, the one which is self occupied is under a home loan and the other property is let out (without any home loan). Can I declare the SOP as let out and other one as self occupied to claim full interest exemption on self occupied property?
You can claim but subject to certain conditions. One condition is that you need to check whether your tenant is claiming HRA or not.
You mean if tenant is claiming HRA only then I can use this option?
Its other way round.
Hi Sir
I have a property at Pune which is let out and i have just completed the Home loan . I have another property at Bangalore on which EMI has begun and im yet to move in that house . Can i declare Pune house as let out and get full interest deduction on my second house ?
Please let me know your work location and where do you stay.
Sir , my work location is in Bangalore city (Domlur) and my rental house is within 4 kms from office and New House in around 11 kms from office .
You can declare Pune Property as let out and claim tax deduction on 100% interest component.
Thank you Sir . Wish you a Happy New Year !
Thanks..Wishing the same to you and your family member.
Hi Sir,
I have a flat in Noida which i purchased on May 2014 but got possession certificate in Dec 2015. I live in a rented apartment in Delhi and work in Gurgaon. I have paid around 4.5 Lakh as the interest on the house loan for this financial year. My query is if I can claim loss on housing property for this whole amount if got possession in Dec’15?
What should be the deemed rental value for this flat now that I have received possession in Dec and can only let out in next few months?
Seek you advise.
Regards,
Amit
Any interest paid till possession is Pre-EMI interest and can be claimed in 5 equal installments starting from FY in which you receive possession. Please go through my post to check how the rental value can be calculated.
Hello Nitin sir ,
I have a question here. I stay in a rented place in Pune and I work in Pune. I have brought my first house in Bangalore. Due to some legal complication with the property papers , reputed banks were not lending me for property purchase . I have taken loan from relatives and parents which seems more economical rather than paying 14.5% for private banks like DHFL ,Co op society . Now my question is
1) How much i can claim as deductions in income tax (is it max 2Lac ? or actual interest outflow-70% of rent received for rented months ). I have only one house.. My rent payment in Pune is quite high and I would like to claim my HRA.
2) How /what documents should i get from lenders (Parents & relatives ) to document interest paid and which i can use in income tax filing .
Appreciate your response
Thanks
Ganesh
1. As your property will be deemed let out therefore you can claim interest on actual. For this you need interest certificate from your relatives and they have to pay tax on interest income.
2. You need to sign home loan agreement and mention all details. As i mentioned, obtain interest certificate from them to claim tax deduction.
Hi Nitin,
Need your advice. I have 2 flats in Pune, same city, that is. Both are having home loans on it. Details as below:
1) On property A I am paying an home loan interest of Rs 3,03,000 for this financial year.
2) On property B, I am paying an interest of Rs 1,43,000 for this financial year.
So for tax purpose, which option would be beneficial: Flat A on rent and Flat B as self occupied OR Flat A self occupied and Flat B on rent? For simplification purpose, we can assume the rental income as Rs. 80,000 pa.
Thanks in advance
Sagar
Flat B as self occupied and Flat A as let out.
Thanks Nitin for the quick response and wishing you a blessed new year ahead.
When both the flats in same city, can both the property shown as ‘let out’ ?
It depends. You should have valid and logical reason for same.
Hello Nitin Sir,
I have 2 properties one in Bhopal and another in Noida and both having loans. I work in Mumbai and stay in rented apartment.
1. Noida property was purchased in Aug 2011 and its builder gave possession in November 2015 and registration is pending and will be done in January 2016 and i have paid 7.5 lac interest till last year 2014-15 and 1 lac is in this year 2015-16 and property is vacant and not yet in my possession as registration is not yet done. Fair rent for that area is 10000
Can i take this as let out property and assume notional rent as NIL for this year 2015-16 as still possession is not taken.
2. Bhopal property was purchased in 2010 and is self occupied by parents and having interest 1 lac in this year and i was claiming its exemption since 2010. Fair rent for the area is 4000. Should i treat this a self occupied or i should make it let out and Noida property as self occupied
Thanks in advance
Nikunj
1. Yes
2. As you are staying in Mumbai therefore both Bhopal & Noida properties will be treated as deemed let out. You can calculate income from house property as i explained in my post.
Thanks Nitin Sir for reply. Just one question. As i said parents are staying in Bhopal property, isnt it self occupied property. As i have loans on both property in cities other than my workplace so can;t i still treat one as self occuplied and another a let out?
Self occupied means your property in that you are staying. As you are staying in Mumbai therefore Bhopal property cannot be self occupied even if your parents are staying. If your parents are not paying any rent to you then your need account notional or fair market rental value to calculate income from house property.
Hi Sir,
I had taken a loan of 25L and have prepaid around 20 L , my statement from HDFC shows only 89000 as interest portion and 2.1 L as principle component for the year where as in amortization sheet initially interest amount was higth a prinicple was low. Now to avail max tax benefit what should i do , i work in hyderabad and my home is in chennai and no one is ocuupying the same
Rgds
Vinoth
You should consider income tax certificate for final calculations.
Sorry just to update statement for 2014-15 – principal – 64k, interest -2.4L, 2015-16 – prinicipal- 1.26L , interest -1.7 L, i started loan in feb 2014 but property handed over in oct 2015 , pls suggest how to declare to get max tax benefit
Personalized consultation is available on paid basis. You can mail me at info@nitinbhatia.in
have sent a mail for the same, appreciate if yu can revert as my last date for submission is 12th
Hello Sir,
I have a query. I am having a flat at Faridabad & one in Kolkata. Both the flats are financed from housing finance companies. I have got possession of both the flats. For Faridabad property I have booked in 2010-11 and paying interest also.
I am at present residing at Delhi and my office is Gurgaon. I did not shifted to Faridabad property since the area is not yet developed properly and distance between my office and Faridabad property is more than 40 KM.
Can I claim HRA benefit as well as treat my Faridabad and Kolkata property under Income / Loss from let out properties to set off Interest expenses(from 2010-11 to till date)?
Kindly advice.
Regards
Arunava
You can claim HRA and declare both properties as let out. You can claim loss from let out property.
Sir, One more query. for previous years(i.e.2010-11 to 2014-15) i need to claim benefit of Interest exp one fifth every year for next five years?
Regards
Arunava
Yes but subject to max limit.
Sir, i have query on this one,
Suppose say as housing interest payment, getting deduction on 1,38,000/- rs for these houses whereas letout property loss calculated using xls provided by company is coming as 1,13,268/-rs. (42000-4153-1400-30%of annual-1,38,000=-112515/-)
Now while in final tax calculation, i am confussed which one is taken as deduction from salary whther its Interest-from-housing-or loss-from-letout-property???
Kindly let me know please…
regards,
Jayaj
Loss from let out property
Hello Sir,
I had one flat in Kolkata.I sold it in March 2010 and invested in a flat in Thane jointly with my daughter. The home loan was taken jointly by my daughter and me.But EMI is being paid by daughter.The possession of the flat in Thane was received in Jan 2013. Since then she is staying in the flat. My share in the flat is 20% which is the capital gain from sale of Kolkata flat.
My queries are:
1.Am I supposed to pay income from house property from 2013 onwards though one of the registered owners is staying in the flat?
2. Now the flat is given on rent. Do I have to pay the income from house property on the rent received in 2015-16 onwards?
3. She is submitting the interest paid against home loan to her employer and getting deducted same from IT calculation.Can she again take that housing loan interest benefit under ” income from house property”?
Please reply and oblige.
Debashis Sengupta
You have not mentioned where did you stayed during the said period. I mean in Thane or in some other city. The answer to 3rd query will depend whether your daughter now moved to some other city or she is in mumbai. If she is in mumbai in which area she stay on rent or owned property. Lastly, where is her office location in Mumbai.
From 2000 onwards,I am staying in Thane. For AY 2009-10, IT have demanded house property income for the closed flat at Kolkata and I have paid so. She is presently staying with me in our flat at Thane as her husband moved to Kolkata in August 2016 and most probably she will also move to kolkata in March 2016.
Her office is located in Mhape, Navi Mumbai.
There is no clear reference related to your case. In my personal opinion
1. As the co-owner is staying in flat therefore you are not supposed to declare income from house property. It will be declared as self occupied property
2. Yes, the rent received will be divided in proportion of ownership among all co-owners.
3. You have not mentioned who is paying EMI. If she is paying 100% EMI then she can claim 100% tax deduction provided you are not claiming any tax deduction on same.
Thanks for your reply. Regarding point 3, can my daughter ( she is paying EMI) claim benefit for interest as normally declared to the employee as well as the interest again while calculating the “Income from house property- benefits for interest on housing loan in both places.
Now she has returned my contribution( before giving the flat in rent) and though I am joint holder do I have to consider income from house property/
Kindly respond and oblige.
Regards
Debashis Sengupta
The rental income is divided in proportion of ownership in property as mentioned in sale deed. If it is not mentioned then it is considered equal i.e. 50:50.
Hello Nitin Sir,
I have taken a loan(35 lacs) in Nov -2015 and have paid 1,15,000 – Interest & 19,000 for Principal amount for FY2015.
Property is in Hyderabad and the flat is not occupied because it’s still under construction.
I am working in Bangalore and paying rent of 21,000 per month.
Can you please help me with the declaration how much i need to declare for tax.
I have already declared 19,000 under principal , 1,15,000 under interest paid.
I heard from friends that if the property is in different city , i can claim some loss for getting tax benefit.
Please help me
Thanks
Prerana
As the property is under construction therefore you cannot claim any tax deduction till you receive possession of same.
Hi Nithin ,
I am looking for Good calculator to check number of Pending EMIs for Home Loan .after adding (X) amount of pre payment.
Thanks
Bhagavan
Please check following link
https://www.nitinbhatia.in/home-loan/emi-calculator/
Hi Nitin very informative article. I want to know one thing that for a supposed to be let out property(as the matter is 02 properties, one self-occupied), then the monthly/quarterly maintenance & upkeep charges paid to the builder is allowed as a deduction
Deduction is not allowed on actual maintenance charges. You can claim 30% of Net Annual Value as a deduction towards repair and maintenance.
Hello Nitin Sir,
I am staying in a self occupied flat and also paid EMI (principal- Rs 105000 and interest- Rs 5500 ) to SBI in the current year 2015. and repayment has been done on Nov 2015. Loan has been closed now.
I have taken another loan(15 lacs) in May -2015 and have paid 1,37,000 – Interest & 49,000 for Principal amount for FY2015-16 from LICHFL for second property.
Property is in near to same location where iI am staying and the flat is not occupied because it’s still under construction. First applicant is my spouse.
Can you please help me with the actual declaration for this year? how much i need to declare for tax.
I heard from friends that if the property is in same city , i can claim some loss for getting tax benefit.
Please help me
Thanks
Santosh
You cannot claim any tax deduction for under construction property. For self occupied property you can claim max deduction of 1.5 lac u/s 80C for principal component and 2 Lac u/s 24(b) for interest component.