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Income from Let out House Property

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Hiral Vakil

Income from House Property
Income Heads
Section 80EE
Last updated on April 27th, 2021

Homeownership is an eternal dream of the Indian middle class. As more and more of us own our primary residence and some even rent out secondary properties, which is Let Out House Property. It is important to under tax implications. House Property Income can be classified into 3 categories as per Income Tax Act:

  1. Self-occupied House / Permanent Residency
  2. Let out House / Rented Property
  3. Deemed Let out House Property/ Vacant House
Earned Income from House Properties?
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How to Calculate Let Out House Property Income?

As per the new income tax regime, losses from house property can only be set off against other income from house property. Moreover, losses from income from house property cannot be carried forward in the new income tax regime.
Tip
As per the new income tax regime, losses from house property can only be set off against other income from house property. Moreover, losses from income from house property cannot be carried forward in the new income tax regime.

Benefit of Co-ownership of Property

When two or more people jointly own a property they are called co-owners. If it is co-owned then such income is taxable in the hands of each co-owner as per their respective ownership percentage. This is a great way to save taxes.

Income Tax Deductions for Joint Owners

Co-owners and co-borrowers

Co-borrowers but not Co-owners

Co-owners but not Co-borrowers

Income Tax Calculator
Calculate income tax liability for FY 2020-21. Compare tax liability as per New vs Old Tax Regime.
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Income Tax Calculator
Calculate income tax liability for FY 2020-21. Compare tax liability as per New vs Old Tax Regime.
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FAQs

Which ITR needs to be filed for Rental Income?

Rental Income is considered under the head “Income From House Property”. And ITR 1 needs to be filed if only one house is owned. Otherwise, ITR 2 needs to be filed.

Can I carry forward the loss from House Property Income?

Yes, you can carry forward the loss for 8 years. It can be set off against House Property Income only.

Who is deemed owner?

The deemed owner is the person who is getting rental income but is not the actual owner. Following are the deemed owners:
1. Spouse of a person to whom ownership is transferred without any monetary consideration,
2. Minor Child of a person to whom ownership is transferred without any monetary consideration.

Is rental income from sub-letting chargeable to tax under the head “Income from House Property”?

No. Any income received by a tenant from sub-letting is not taxable under this head. It is taxed under the head “Income from other Sources” or “Profit and Gains from Business or Profession” as the case may be.

Can I claim expenses like property tax or maintenance charges on a self occupied property?

No. You cannot claim expenses on a Self Occupied Property. However, if you have a property loan, you can claim the Interest paid on such loan as an expense under the head Income from House Property in the ITR. You can claim expenses on a Let Out House Property.

Got Questions? Ask Away!

  1. Hey Urja,

    If a House Property is given on rent for the whole year or a part of the year then it is considered as Let Out House Property.

    Net Annual Value (NAV) = Gross Annual Value – Municipal Taxes

    For calculation of let out property, Gross Annual Value (GAV) is the amount of rent received during the year.

    For example:

    Anuj rented property with an annual rent of INR 2,00,000. Anuj paid INR 15,000 for municipal taxes the financial year.

    NAV = 2,00,000 - 15,000

    NAV = 1,85,000

    Here is a guide on Income from House Property to help you understand better.

    Hope this helps :slight_smile: