Income from Deemed Let Out House Property

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Hiral Vakil

Income from House Property
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As per the income tax act, if you own more than one property, then the second and subsequent properties are considered as deemed let out House Property. Further, rent is calculated based on fair market value and tax is levied on the same. Deemed Let Out Property is also known as Vacant Property.

Up to FY 2018-19, a taxpayer was allowed to claim only 1 property as Self Occupied and the rest were considered as Deemed Let Out. However, from FY 2019-20, a taxpayer can claim 2 properties as Self Occupied. This will help those taxpayers who own more than 1 property.
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Up to FY 2018-19, a taxpayer was allowed to claim only 1 property as Self Occupied and the rest were considered as Deemed Let Out. However, from FY 2019-20, a taxpayer can claim 2 properties as Self Occupied. This will help those taxpayers who own more than 1 property.

The calculation of income from Deemed let out house property is similar to Let Out House. However, deduction u/s 24(b) is allowed up to 2 lakhs rupees i.e, same as Self Occupied House.

Guide: Income from House Property and Taxes
House Property consists of any building and land attached to that building.
Read More
Guide: Income from House Property and Taxes
House Property consists of any building and land attached to that building.
Read More

How to Determine Taxable Income from Deemed Let Out House Property?

Income from Deemed Let Out Property is calculated as per the following steps:

  1. Calculate Gross Annual Value (GAV)
  2. Deduct Municipal Taxes
  3. Calculate Net Annual Value (NAV)
  4. Deduct Standard Deduction of 30%
  5. Deduct Interest paid on Home Loan u/s 24(b)

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  1. Calculate Gross Annual Value (GAV)

    GAV of Deemed let out property is least of the following:
    – Fair Rent Value (FRV) (Determined using Annual Rent Value of similar properties in your area)
    – Assessed Value (Determined as per Municipal Tax Value of the property)
    – Standard Rent (Determined as per Rent Act)

  2. Deduct Municipal Taxes Paid

    Municipal tax is nothing but a property tax paid by a taxpayer. The deduction of the full amount of Municipal Taxed paid is allowed. It reduces the Net Annual Value of the property. This deduction is not allowed if not paid by the owner

  3. Calculate Net Annual Value (NAV)

    NAV is nothing but GAV reduced by Municipal Taxes Paid.

ParticularsSelf OccupiedLet OutDeemed Let Out
Gross Annual Value (Generally, total rent received)NILXXXXXX
Less: Municipal Taxes PaidNot ApplicableXXXXXX
Net Annual Value NILXXXXXX
Less: Deduction u/s 24
1. Standard Deduction at 30%
2. Interest on Housing Loan
Not Applicable INR 2 Lakh LimitXXX
No Limit
XXX
No Limit
Income from House Property (XXX) XXXXXX
ITR for Multiple House Properties
CA Assisted Income Tax Return filing for Individuals and HUFs having multiple house property income, multiple salaries and income from other sources.
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ITR for Multiple House Properties
CA Assisted Income Tax Return filing for Individuals and HUFs having multiple house property income, multiple salaries and income from other sources.
[Rated 4.8 stars by customers like you]

FAQs

What is the difference between let out and deemed let out?

House that is given on rent for whole or part of the year is termed as Let Out House Property. If a person has more than one house, in such a case only one can be considered as self-occupied at the option of the individual.

How do you claim loss on house property?

A taxpayer can claim deduction under Section 24 of interest paid on home loan for each of the houses separately. However, the overall loss from house property that can be claimed for a year is restricted to Rs 2 lakhs.

Can we carry forward loss from self occupied house property?

In case the Loss from House Property has not been adjusted in the same year, such loss will be carried forward to the next year and allowed to be set off with income arising other the same head i.e. House Property.

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