All you need to know about taxation of income from house property

Income from house property is the income which is earned from the property owned by an assessee. House property comprises of building itself and land attached to such building. Here, property refers to a building (houses, warehouses, office buildings, factories, halls, shops, auditoriums, etc.) and land attached to such building (garage, compound, car parking space, garden, gymkhana, playground, etc.). Sometimes, the taxability might not essentially be on rent received. In case the property isn’t let out, the tax would be charged on the possible income which such house property can yield which is referred to as “deemed rent”.
House Property Tax
The income from a house property is included in an assessee’s gross total income only in case it satisfies the below-mentioned conditions:
1. The assessee owns such house property.
2. The property comprises of house, buildings or land.
3. The property might be utilized for any purpose other than used by the assessee itself for purpose of his business or profession.

  1. The income from a house property that is occupied by the assessee for his own residence or couldn’t be occupied by the assessee for the purpose of his residential due to his engagement at some other place is considered as NIL. Such assessee, are not allowed to avail the standard deduction of 30% in such scenario. However, the assessee is entitled to avail the deduction for the interest which is paid on the house loan together with the accrued interest of pre-construction period.
  2. The income from a house property is included in a person’s total income only in case such house or part of such house is let out for any part of the year, or other benefits are derived from such house by the assessee.
  3. When an assessee has more than one house then, then the assessee could exercise an option of treating anyone of his/her house to be self-occupied. The other house would be deemed to be let out.


How can you Save Tax on Income from House Property?

Careful planning could help you to save a considerable amount of tax. Below mentioned are some of the things which you can follow:

  • Taking a Joint Home Loan: Jointly owning a house property and also applying for a joint home loan, will entitle you and your partner for tax deductions on interest on the home loan up to INR 1,50,000 each.
  • Having Joint ownership: Tax on income from house property could be shared between the co-owners, and therefore can reduce the load of tax.
  • Owning more than one house property: In case you have multiple properties, one out of these could be considered as your residence and would fall under SOP (Self-occupied property). It is crucial to assess the tax on all the properties which you own and select the one which has the highest tax liability as your residence and let out the rest. You could also change the self-occupied property every year.
  • Vacant houses which you own would still be taxable depending on the fair rental value, so it is advisable for letting them out, facilitating rental income and no loss due to taxation.

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