Income from House Property Calculation

Q.1) Mr. Mehra owns a house at Delhi, which is let-out. Fair rent of the house is Rs.
24,000
whereas actual rent received is Rs.30,000. He also received Rs.10,000 from the tenant for
charges towards lift, generator and security. He makes the following expenditure in respect of
the house property:
1. Municipal taxes paid by Mehra Rs.4,000
2. Fire Insurance Rs.2,400
3. Collection Charges Rs.500
4. Repairs Rs.2,000
5. Land Revenue Rs.3,800
6. Ground Rent Paid Rs.2,000
Interest on borrowed capital during the previous year 2015-16 is Rs.4,000. Funds borrowed on
April 1, 2012, Rs.40,000 @ 10% interest p.a. were used for construction of the house which was
completed on March 31, 2016. Compute the income earned by Mr. Mehra from his let out house
property during the assessment year 2016-17.
Solution:
Name of Assessee : Mr. Mehra
Assessment Year : 2016-17
Previous Year : 2015-16
Status : Individual
Residential Status : R&OR
Pan No : _________
Computation of Income from House Property
Particulars Rs. Rs.
Let Out Property:

Gross Annual Value, higher of
1. Reasonable Lettable Value (i.e Fair Rent) 24,000
2. Actual Rent Received (WN 1) 30,000 30,000
Less: Municipal Taxes Paid 4,000
Net Annual Value 26,000
Less: Deduction u/s 24
a. Standard Deduction u/s 24(a) (26,000 x 30%) 7,800
b. Interest on Loan u/s 24(b)
a. Pre Construction (WN 2) 2,400
b. Post Construction 4,000 6,400 14,200
Income from Let Out Property 11,800
Note:
1. Rent includes only charges for house property. Charges received for lift etc are taxed not
as Income from House Property but as Income from Other Sources.
2. Pre-Construction Interest is computed as follows:
a. Construction completed in previous year 2015-16.
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b. Pre Construction period starts from the date of borrowing to the end of preceding
financial year in which the construction has completed i.e from 1-4-2012 to
31-3-2015.
c. Pre construction Interest = 40,000 x 10% x 3 years = Rs.12,000
d. Pre construction Interest allowable during current previous year = 12,000 x ⅕ =
Rs.2,400.
Q.2) A has a residential property, details of which are given below:

1. Municipal Valuation Rs.1,15,000
2. Rent Received Rs.10,000 p.m.
The following expenses were paid by A:
a. Municipal Taxes Rs.10,000
b. Collection Charges Rs.8,000
c. Insurance Rs.10,000
The house remained vacant for one month during the year. Compute his income from house
property for the assessment year 2016-17.
Solution:
Name of Assessee : Mr. A
Status : Individual
Pan No : _________
Particulars Rs. Rs.
Vacant Let Out Property:

1. Reasonable Lettable Value (i.e Municipal Valuation) 1,15,000
2. Actual Rent Received (10,000 x 11) (WN 1) 1,10,000 1,10,000
Net Annual Value 1,00,000
a. Standard Deduction u/s 24(a) (1,00,000 x 30%) 30,000
Income from Vacant Let Out Property 70,000
Note: Actual Rent Received is less than Reasonable Lettable Value only because of vacancy,
hence Actual Rent Received becomes Gross Annual Value.
Q.3) Refer the above illustration. Compute A’s income from house property for the assessment
year 2016-17, if the Municipal Valuation of his property is Rs.1,00,000.
Solution:
Name of Assessee : Mr. A

2
Status : Individual
Pan No : _________
Particulars Rs. Rs.

1. Reasonable Lettable Value (i.e Municipal Valuation) 1,00,000
2. Actual Rent Received (10,000 x 11) 1,10,000 1,10,000
Q.4) Compute the Income from House Property from the following particulars in respect of a
new property owned by M which was let out from 1-4-2010 onwards:
1. Fair Rent Rs.60,000
2. Actual Rent Receivable Rs.7,500 p.m
3. Rent Actually Received (for 10 months only due to vacancy period of 2 months)
Rs.75,000
4. Municipal Taxes Paid (including arrears for earlier year) Rs.14,400
5. Interest on borrowal paid during the year Rs.23,000
6. Interest on borrowal paid prior to 1-4-2010 Rs.20,000
7. Collection Charges Rs.3,400
8. Unrealised Rent claimed as deduction in earlier year, but received during the year
2015-16 Rs.11,000
9. Arrears of rent for earlier year received during the year Rs.8,000
10. Expenditure on repairs to property Rs.3,000
11. Ground Rent Paid Rs.4,500
12. Insurance premium paid, relating to the property Rs.2,200
13. Expenditure incurred on collecting unrealised rent Rs.3,500
Solution:
Name of Assessee : Mr. M
Status : Individual
Pan No : _________

3
Particulars Rs. Rs.

1. Reasonable Lettable Value (i.e Fair Rent) 60,000
2. Actual Rent Received (7,500 x 10) 75,000 75,000
Less: Municipal Taxes Paid (WN 1) 14,400
b. Interest on Loan u/s 24(b) (WN 2) 23,000 41,180
Add: Unrealised Rent, realised now 11,000
Add: Arrears of Rent Rent Received 8,000
Less: Standard Deduction (8,000 x 30%) ,400
2 5,600 16,600
Note:
1. Municipal taxes are deducted on payment basis, even if they are for earlier year.
2. Only interest for the current year is claimed. The five year period for claiming pre
acquisition interest paid before 1-4-2010 is over by 31-3-2015. Hence pre acquisition
interest cannot be claimed.
3. No separate deduction is allowed for repairs, insurance, ground rent etc.
4. Expenses incurred for the purpose of realising unrealised rent cannot be claimed.
Q.5) M has a residential property, details of which are given below:

1. Municipal Valuation Rs.1,00,000
2. Fair Rent Rs.15,000 p.m
3. Standard Rent Rs.9,600 p.m
4. Municipal Taxes paid @ 20% of municipal valuation
5. Interest on loan for purchase of this house Rs.20,000
6. Rent Receivable Rs.10,000 p.m
The house property was vacated by the tenant on the last day of october, 2015. It could then be
let out only from 1st January, 2016 at Rs.14,000 p.m. Rent for March 2016 could not be realised
(the conditions under the relevant income tax rules were satisfied). Compute his income from
house property for the assessment year 2016-17.
Solution:
Name of Assessee : Mr. M
Status : Individual
Pan No : _________

4
Particulars Rs. Rs. Rs.

Gross Annual Value, higher of 1 & 2
1. Reasonable Lettable Value, higher of a & b
a. Fair Rent (15,000 x 12) 1,80,000
b. Municipal Valuation 1,00,000
1,80,000
Subject to Standard Rent (9,600 x 12) 1,15,200 1,15,200
2. Actual Rent Receivable
a. 01/04/2015 - 31/10/2015 (10,000 x 7) 70,000
b. 01/01/2016 - 31/03/2016 (14,000 x 3) 42,000
1,12,000
Less: Unrealised Rent for March 14,000 98,000 98,000
Less: Municipal Taxes Paid (1,00,000 x 20%) 20,000
b. Interest on Loan u/s 24(b) 20,000 43,400
Note: Actual Rent Received is less than Reasonable Lettable Value only because of vacancy,
hence Actual Rent Received becomes Gross Annual Value.
Q.6) X, has occupied three houses for his own residential purposes, particulars of which are as
follows:
Particulars House - I House - II House - III
Standard Rent 18,000 20,000 NA

Municipal Valuation 11,500 30,000 30,000
Fair Rent 15,000 25,000 35,000
Municipal Taxes Paid 1,200 2,400 3,600
Repairs 2,000 NIL 4,200
Interest paid on loan taken against houses for
meeting personal expenses 2,200 2,500 3,000
Compute the income from house property for X, for the assessment year 2016-17. House - I in
his hometown was vacant throughout the year as he resided in House - III in Mumbai where he
works. House - II in Vashi was used by him only for 2 months in summer vacation.
Solution:
As X has occupied three houses for his residential purposes, only one house (as per his choice)
can be treated as “Self Occupied Property” and other two houses will be treated as “Deemed
Let Out Property”. House III should be treated as “Self Occupied Property” as it has the highest
“Gross Annual Value. House I & II will be “Deemed Let Out Property”.
Name of Assessee : Mr. X

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Status : Individual
Pan No : _________
Particulars H-I H-II H-III
(DLOP) (DLOP) (SOP)
Reasonable Lettable Value, higher of 1 & 2

1. Fair Rent 15,000 25,000 NIL
2. Municipal Valuation 11,500 30,000 NIL
15,000 30,000 NIL
Subject to Standard Rent 18,000 20,000 NIL
Gross Annual Value 15,000 20,000 NIL
Less: Municipal Taxes Paid 1,200 2,400 NIL
Net Annual Value 13,800 17,600 NIL
a. Standard Deduction u/s 24(a) (30% of NAV) 4,140 5,280 NIL
Income from House Property 9,660 12,320 NIL
Note: Interest on loan is not allowed as deduction as loan is taken for meeting personal
expenses.
Q.7) Mr. Pedro and his 3 sons Congo, Bongo and Chongo are equal co-owners of a house
property consisting of 20 (Twenty) residential flats. Out of the above one flat each is occupied
by Pedro and his sons for own residential purpose (Self Occupied). The balance 16 (Sixteen)
flats are let out at the rent of Rs.2,000 per month per flat.
The reasonable letting value of each flat is Rs.10,000 per annum. The municipal taxes paid for
each flat is @ 50% of the reasonable letting value.
The following expenses were incurred by them during the year ended 31st March, 2016 in
respect of the property.
1. Fire Insurance Premium Rs.12,000 (for 20 flats)
2. Interest on money borrowed for construction of property Rs.60,000 (for 20 flats)
Compute the income from house property chargeable in the hands of all the co-owners for the
assessment year 2016-17.
Solution:
Name of Assessee : Mr. Pedro & his 3 sons (Co-Owners)
Status : Individual
Pan No : _________

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1. Let Out Property (16 Flats):
1. Reasonable Lettable Value (10,000 x 16) 1,60,000
2. Actual Rent Received (2,000 x 12 x 16) 3,84,000 3,84,000
Less: Municipal Taxes Paid (5,000 x16) 80,000
b. Interest on Borrowed Funds (60,000 x 16/20) 48,000 1,39,200
Income from Let Out Property (16 Flats) 1,64,800
Share of each Co-owner from Let out Property (1,64,800/4) 41,200
B. Self Occupied Property (Each Flat):

Gross Annual Value NIL
a. Interest of Borrowed Funds (60,000/20) 3,000
Share of each Co-owner from Self Occupied Property (3,000)
Taxable Income from House Property (A+B) 38,200
Note:
1. Each co-owner can independently claim Rs.3,000 as interest in respect of SOP Flat and
claim loss on this account from his share of income of Rs.41,200 from Mumbai House.
2. Thus, Mr. Pedro and each of his sons has the same total income of Rs.38,200 each.
Q.8) Ram owned a house property at Madras which was occupied by him for the purpose of his
residence. He was transferred to Delhi in June 2015 and therefore he let out the property with
effect from July 1, 2015 on a monthly rent of Rs.3,000. The municipal tax payable in respect of
property @25% of the rateable value was Rs.6,000 of which 50% was paid by him before March
31, 2016. Fair Rent of the property is Rs.20,000. Interest on money borrowed for the
construction of the property amounted to Rs.20,000. Compute the Income from House Property
for the assessment year 2016-17.
Solution:
Name of Assessee : Mr. Ram
Status : Individual
Pan No : _________
Particulars Rs. Rs.
Partly Let Out Property:


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a. Fair Rent 20,000
b. Municipal Valuation (6,000 x 100/25) 24,000 24,000
2. Actual Rent (3,000 x 9) 27,000
27,000
Less: Municipal Taxes Paid by owner (6,000 x 50%) 3,000
Income from Partly Let Out Property (Loss) -3,200
Q.9) Mr. Suneet is the owner of a house property. One third of the house is used for business
and the remaining is let out at the rate of Rs.3,000 per month. The property was vacated for 4
months. Following additional information is available to you.
1. Municipal Taxes Paid Rs.1,500
2. Interest on funds borrowed for repairs Rs.6,000
3. Repairs (borne by tenant) Rs.2,000
4. Municipal Rateable Value Rs.48,000
Mr. Suneet receives during the year unrealised rent of the previous year i.e. 2011-12 Rs.750.
You are required to ascertain the income chargeable to tax under the head “Income from House
Property” of Mr.Suneet for the assessment year 2016-17.
Solution:
Name of Assessee : Mr. Suneet
Status : Individual
Pan No : _________
Particulars Rs. Rs.
Partly Vacant Let Out Property:

1. Reasonable Lettable Value (i.e, Municipal Valuation) (48,000
x ⅔) 32,000
2. Actual Rent (3,000 x 8) 24,000 24,000
Less: Municipal Taxes Paid by owner (1,500 x 2/3) 1,000
b. Interest on Loan u/s 24(b) (6,000 x ⅔) 4,000 10,900
Income from Partly Vacant Let Out Property 12,100
Add: Unrealised Rent Received 750
Income from House Property 12,850

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Note:
1. One third of the House owned by Mr. Suneet used for business is not chargeable under
the head “Income from House Property”.
2. Remaining two third of the house will be charged under the “Income from House
Property”.
3. Unrealised rent is taxed assuming that it was allowed to be deducted as unrealised rent
earlier.
Q.10) Mr. Kunal is the owner of two house properties. From the following information furnished
by him for the year ending 31st March, 2016, compute his taxable income for the assessment
year 2016-17.
Particulars HP 1 HP 2
1. Nature of Occupancy SOP LOP

2. Annual Rateable Value Rs.20,00 Rs.30,00
3. Construction Commenced on 0 0
4. Construction Completed on 1/4/2005 1/4/2004
5. Municipal Taxes paid for the period 1/4/2015 to 31/3/2016 1/4/2006 28/2/2007
6. Insurance Premium paid for the period 1/10/2014 to Rs.8,000 Rs.9,600
30/9/2015
7. Interest on loan borrowed for construction Rs.2,000 Rs.2,000
Rs.6,000 Rs.6,000
Solution:
Name of Assessee : Mr. Kunal
Status : Individual
Pan No : _________
Particulars Rs. Rs.
A. Let Out Property:

Gross Annual Value (i.e, Annual Rateable Value) 30,000
Less: Municipal Taxes Paid by owner 9,600
Income from Let Out Property (A) 8,280
B. Self Occupied Property:

Less: Municipal Taxes Paid by owner NIL

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Net Annual Value NIL
a. Standard Deduction u/s 24(a) NIL
Income from Self Occupied Property (B) -6,000
Total Income From House Property (A+B) 2,280
Q.11) B, owns a building consisting of three identical units whose construction was completed
on March 31, 2015. The building was occupied from April 1, 2015 onwards. The particulars
pertaining to the three units for the year ended March 31, 2016 are given below:
Particulars Unit 1 Unit 2 Unit 3
1. Fair Rent 60,000 60,000 60,000

2. Rent Received NIL 72,000 NIL
3. Municipal Taxes:
a. Paid 3,000 5,000 3,000
b. Due but not yet paid 3,000 5,000 3,000
4. Land revenue due but outstanding 1,200 1,200 1,200
5. Ground rent due, not yet paid 2,400 2,400 2,400
Nature of occupation: Unit 1 - Self Occupied Property, Unit 2 - Let Out Property, Unit 3 - Used
for own business.
On April 1, 2013 he had borrowed a sum of Rs.5,00,000 bearing interest at 12% per annum for
construction of this building. The total cost of construction of the building - Rs.12,00,000.
Compute the income from house property of B for the assessment year 2016-17.
Solution:
Name of Assessee : Mr. B
Status : Individual
Pan No : _________
A. Self Occupied Property (Unit 1):

a. Interest Payable (WN 2) 24,000 -24,000
B. Let Out Property (Unit 2):


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1. Reasonable Lettable Value (ie Fair Rent) 60,000
2. Actual Rent 72,000 72,000
b. Interest on Borrowed Funds (WN 2) 24,000 44,100 22,900
Total Income From House Property (Loss) (A+B) -1,100
Notes:
1. House property has three units. Income from Unit 3, used for business is not taxable
under the head Income from House Property. Income from Unit 1 & 2 will be computed
as SOP & LOP respectively.
2. Interest on loan for Unit 1 & 2 is calculated as follows:
a. Interest for current year = 5,00,000 x 12% x ⅓ = 20,000
b. Interest for pre construction period = 20,000 x ⅕ = 4,000
Total = 24,000
Q.12) Mr. Krishna owns a residential house in Delhi. The house is having two identical units.
First unit of the house is self-occupied by Mr. Krishna and another unit is rented for Rs.12,000
p.m. The rented unit was vacant for three months during the year. The particulars of the house
for the previous year 2015-16 are as under:
a. Standard Rent Rs.2,20,000 p.a
b. Municipal Valuation Rs.2,44,000 p.a
c. Fair Rent Rs.2,35,000 p.a
d. Municipal tax paid by Mr. Krishna - 12% of the Municipal Valuation
e. Light and water charges Rs.800 p.m
f. Interest and water charges Rs.2,000 p.m
g. Insurance charges Rs.3,500 p.a
h. Painting expenses Rs.16,000 p.a
Compute income from house property of Mr. Krishna for the A.Y 2016-17.
Solution:
Name of Assessee : Mr. Krishna
Status : Individual
Pan No : _________
A. Vacant Let Out Property (Unit 1 - 50%):


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a. Fair Rent (2,35,000 x 50%) 1,17,500
b. Municipal Valuation (2,44,000 x 50%) 1,22,000
1,22,000
Subject to Standard Rent (2,20,000 x 50%) 1,10,000 1,10,000
2. Actual Rent Received (12,000 x 9) 1,08,000
Gross Annual Value 1,08,000
Less: Municipal Taxes Paid (1,22,000 x 12%) 14,640
b. Interest on Loan u/s 24(b) (2,000 x 50% x 12) 12,000 40,008 53,352
B. Self Occupied Property (Unit 2 - 50%)

Less: Municipal Tax NIL
b. Interest on Loan u/s 24(b) (2,000 x 50% x 12) 12,000 12,000 -12,000
Total Income from House Property (A+B) 41,352
Note: No deduction will be allowed separately for light and water charges, insurance charges
and painting expenses.
Q.13) Mr. X owns one residential house in Mumbai. The house is having two units. First unit of
the house itself occupied by Mr. X and another unit is rented for Rs.8,000 p.m. The rented unit
was vacant for 2 months during the year.
The particulars of the house for the previous year 2015-16 are as under:
1. Standard Rent Rs.1,62,000 p.a
2. Municipal Valuation Rs.1,90,000 p.a
3. Fair Rent Rs.1,85,000 p.a
4. Municipal Tax - 15% of Municipal Valuation
5. Light and water charges paid by the tenant Rs.500 p.m
6. Interest on Borrowed Capital Rs.1,500 p.m
7. Insurance Charges paid by Mr. X Rs.3,000 p.a
8. Repairs Rs.12,000 p.a
Compute income from house property of Mr. X for the A.Y 2016-17.
Solution:
Name of Assessee : Mr. X
Status : Individual
Pan No : _________

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A. Vacant Let Out Property (Unit 1 - 50%):

a. Fair Rent (1,85,000 x 50%) 92,500
b. Municipal Valuation (1,90,000 x 50%) 95,000
95,000
Subject to Standard Rent (1,62,000 x 50%) 81,000 81,000
2. Actual Rent Received (8,000 x 10) 80,000
Gross Annual Value 80,000
Less: Municipal Taxes Paid (95,000 x 15%) 14,250
b. Interest on Loan u/s 24(b) (1,500 x 50% x 12) 9,000 28,725 37,025
B. Self Occupied Property (Unit 2 - 50%)

Less: Municipal Tax NIL
b. Interest on Loan u/s 24(b) (1,500 x 50% x 12) 9,000 9,000 -9,000
Total Income from House Property (A+B) 28,025
Note:
1. It is assumed that both the units are of identical size. Therefore, the rented unit would
represent 50% of total area and the self occupied unit would represent 50% of total area.
2. No deduction will be allowed separately for light and water charges, insurance charges
and repairs.
Q.14) Mr. Raman is a co-owner of a house property along with his brother.
1. Municipal Value of the property Rs.1,60,000
2. Fair Rent Rs.1,50,000
3. Standard Rent under the Rent Control Act Rs.1,70,000
4. Rent Received Rs.15,000 p.m
The loan for the construction of this property is jointly taken and the interest charged by the
bank is Rs.25,000 out of which Rs.21,000 have been paid. Interest on the unpaid interest is
Rs.450. To repay this loan, Raman and his brother have taken a fresh loan and interest charged
on this loan is Rs.5,000. The Municipal Taxes of Rs.5,100 have been paid by the tenant. Mr.
Raman has 50% share in the house property.
Compute the income from this property chargeable in the hands of Mr. Raman for A.Y. 2016-17.
Solution:
Name of Assessee : Mr. Raman

13
Status : Individual
Pan No : _________
Let Out Property

a. Fair Rent 1,60,000
b. Municipal Valuation 1,50,000
1,60,000
Subject to Standard Rent 1,70,000 1,60,000
2. Actual Rent Received (15,000 x 12) 1,80,000
Gross Annual Value 1,80,000
Less: Municipal Taxes Paid NIL
b. Interest on Loan u/s 24(b)
i. Interest on loan taken from bank 25,000
ii. Interest on fresh loan to repay old loan 5,000 30,000 84,000
Income from Let Out Property 96,000
Income from Let Out Property taxable in the hands of

Mr. Raman (96,000 x 50%) 48,000
Note:
1. Interest on housing loan is allowable as a deduction under section 24 on accrual basis.
2. Interest on fresh loan taken to repay old loan is also allowable as deduction.
3. Interest on unpaid interest is not allowable as deduction under section 24.

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Income from House Property Calculation

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Income from House Property Calculation

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Q.1)​ Mr. Mehra owns a house at Delhi, which is let-out. Fair rent of the house is Rs.

Let Out Property:

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Q.2)​ A has a residential property, details of which are given below:

Vacant Let Out Property:

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Vacant Let Out Property:

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Vacant Let Out Property:

Q.5)​ M has a residential property, details of which are given below:

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Vacant Let Out Property:

Standard Rent 18,000 20,000 NA

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Reasonable Lettable Value, higher of 1 & 2

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Share of each Co-owner from Let out Property (1,64,800/4) 41,200

B. Self Occupied Property (Each Flat):

Partly Let Out Property:

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Partly Vacant Let Out Property:

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1. Nature of Occupancy SOP LOP

A. Let Out Property:

B. Self Occupied Property:

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Total Income From House Property (A+B) 2,280

Particulars Unit 1 Unit 2 Unit 3

1. Fair Rent 60,000 60,000 60,000

A. Self Occupied Property (Unit 1):

B. Let Out Property (Unit 2):

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A. Vacant Let Out Property (Unit 1 - 50%):

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B. Self Occupied Property (Unit 2 - 50%)

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A. Vacant Let Out Property (Unit 1 - 50%):

B. Self Occupied Property (Unit 2 - 50%)

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Let Out Property

Income from Let Out Property taxable in the hands of

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Q.1) Mr. Mehra owns a house at Delhi, which is let-out. Fair rent of the house is Rs.

Q.2) A has a residential property, details of which are given below:

Q.5) M has a residential property, details of which are given below: