HOW TO CALCULATE INCOME FROM HOUSE PROPERTY
Here is how you compute your income from a house property:
a. Determine Gross Annual Value (GAV) of the property: The gross annual
value of a self-occupied house is zero. For a let out property, it is the rent
collected for a house on rent.
b. Reduce Property Tax: Property tax, when paid, is allowed as a deduction from
GAV of property.
c. Determine Net Annual Value(NAV) : Net Annual Value = Gross Annual Value
– Property Tax
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,d. Reduce 30% of NAV towards standard deduction: 30% on NAV is allowed as a
deduction from the NAV under Section 24 of the Income Tax Act. No other expenses
such as painting and repairs can be claimed as tax relief beyond the 30% cap under
this section.
e. Reduce home loan interest: Deduction under Section 24 is also available for
interest paid during the year on housing loan availed.
f. Determine Income from house property: The resulting value is your income
from house property. This is taxed at the slab rate applicable to you.
g. Loss from house property: When you own a self occupied house, since its GAV is
Nil, claiming the deduction on home loan interest will result in a loss from house
property. This loss can be adjusted against income from other heads.
, DEDUCTION ON INCOME FROM HOUSE PROPERTY
a. Tax Deduction on Home Loan Interest: Section 24
Homeowners can claim a deduction of up to Rs 2 lakh on their home loan interest, if
the owner or his family resides in the house property. The same treatment applies
when the house is vacant. If you have rented out the property, the entire home loan
interest is allowed as a deduction.
b. Tax Deduction on Principal Repayment
The deduction to claim principal repayment is available for up to Rs. 1,50,000 within
the overall limit of Section 80C. Check the principal repayment amount with your
lender or look at your loan instalment details.
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Here is how you compute your income from a house property:
a. Determine Gross Annual Value (GAV) of the property: The gross annual
value of a self-occupied house is zero. For a let out property, it is the rent
collected for a house on rent.
b. Reduce Property Tax: Property tax, when paid, is allowed as a deduction from
GAV of property.
c. Determine Net Annual Value(NAV) : Net Annual Value = Gross Annual Value
– Property Tax
63
,d. Reduce 30% of NAV towards standard deduction: 30% on NAV is allowed as a
deduction from the NAV under Section 24 of the Income Tax Act. No other expenses
such as painting and repairs can be claimed as tax relief beyond the 30% cap under
this section.
e. Reduce home loan interest: Deduction under Section 24 is also available for
interest paid during the year on housing loan availed.
f. Determine Income from house property: The resulting value is your income
from house property. This is taxed at the slab rate applicable to you.
g. Loss from house property: When you own a self occupied house, since its GAV is
Nil, claiming the deduction on home loan interest will result in a loss from house
property. This loss can be adjusted against income from other heads.
, DEDUCTION ON INCOME FROM HOUSE PROPERTY
a. Tax Deduction on Home Loan Interest: Section 24
Homeowners can claim a deduction of up to Rs 2 lakh on their home loan interest, if
the owner or his family resides in the house property. The same treatment applies
when the house is vacant. If you have rented out the property, the entire home loan
interest is allowed as a deduction.
b. Tax Deduction on Principal Repayment
The deduction to claim principal repayment is available for up to Rs. 1,50,000 within
the overall limit of Section 80C. Check the principal repayment amount with your
lender or look at your loan instalment details.
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