Quick Recap of Income from House Property

[MadhuTeja Lankalapalli]

INCOME FROM HOUSE PROPERTY

Introduction:

It's a pretty attractive concept because we can implement house property provisions effortlessly in the real world and in regards to exams, thus I believe everyone enjoys it. Basic point is assessee must be the owner of the property. Ownership includes both freehold and leasehold properties and ownership includes deemed owner. If you bought a land and registration is pending still you’re the owner and there is no restriction regarding that owner of land & building is the same person and there is no restriction regarding that owner of land & building in previous year and assessement year is the same person

Points to be noted in income from house property:

📍 Even though we can only declare two of our properties as being self-occupied and the rest as being deemed rented out if we have more than two, we can choose to declare any two of them as being self-occupied in order to minimise our taxable income by declaring high-taxable-income properties as being self-occupied.

📍 Let out/deemed let out/Self occupied for a part of year and let out for another part doesn’t have any limit for a deduction under section 24(b) But generally in the case of self-occupied property maximum limit for a deduction is 30000/200000 per annum per owner not for per house.

📍 If the actual rent collected minus the unrealized rent is less than the expected rent as a result of vacancy, then it is to our advantage to show the less-than-expected rent as GAV.

📍 If the actual rent collected minus the unrealized rent is less than the expected rent as a result of self occupied, then we have to show the expected rent as GAV as a regular practice.

📍 If a property has both a self-occupied section and a portion that is rented out, only the piece that is rented out is taxed; the self-occupied portion's municipal tax is not claimed because GAV of self occupied is always NIL.

📍 Even though we are not now owners, deduction u/a 24(a) @30% applies to arrears and unrealised rent that we received from a house property that was sold years ago. Therefore, we must show them as taxable income in the current year.

📍 Both of us are eligible to deduct the interest on a loan under Section 24(b) if we take out a loan on property jointly.

📍 Interest on housing loan is allowed as a deduction u/s 24(b) on accrual basis.

📍 Interest on fresh loan taken to repay the previous loan is also eligible for deduction.

📍 Interest on unpaid interest is not allowed as deduction u/s 24(b)

📍 No deduction will be allowed separately for light and water charges, lease money paid, insurance charges and repairs.

📍 Preconstruction period interest is to be allowed as deduction in five equal installments from the year of completion of construction.

📍 Water tax is not allowed as a separate deduction practically.

Conclusion:

In India, the majority of individuals still pay their rent in cash for their homes, therefore if you want to show off more income or declare less, income from house property is the ideal head to take advantage of. And most of the people not calculating GAV as per the rule while filling income tax returns, they just showed the actual rent received only under Income from house property .