Income from House Property

Annual value of any property comprising of building and land

attached thereto of which the assessee is the owner is chargeable
to tax under the head “ Income from House Property ”

The assessee should be the owner of the house property

The annual value of property used by the assessee for his
business or profession is not chargeable to tax.
The amount chargeable to tax is the annual value of the house
property

House Property may be :

a) Let out House Property ( LOP )
b) Self Occupied House Property (SOP )
c) Deemed to be let out House Property (DLOP)
Property income exempt from tax

Income from farm house

Annual value of any one palace of an ex-ruler
Property income of local authority / university/
hospital/trade union /approved scientific research
association / political party
One self occupied property
Computation of income from let out property

Gross Annual value xxx

Less : Municipal taxes paid xxx
Net Annual Value xxx
Less: Deductions u/s 24
Standard deduction (30% of NAV) xxx
Interest on borrowed capital xxx
Income from house property xxx
Gross Annual value ( GAV ) refers to the capacity of the house
property to yield income.

a) Reasonably Expected Rent ( RER ) or

b) Actual Rent Received (ARR)* whichever is higher

RER
Fair rent or Municipal Value whichever is higher subject to Standard
Rent ( RER cannot be more than Standard Rent )

If ARR is lower than RER due to the house property remaining

vacant for a part of the year, then ARR is taken as GAV.

Loss due to vacancy can be deducted from higher of RER or ARR as

calculated above
Interest on borrowed loans

-Upto Rs.200000 for SOP ( In case loan is for repairs, renovation etc.
Rs.30000)
-No limit for LOP ( loss from house property due to interest limited to
200000)
Additional deduction for individuals ( Sec 80EE)
For first time home buyers, additional deduction of Rs.50000 interest
per financial year till the loan is repaid.

Conditions for claiming deduction:

Maximum value of the HP- Rs.50 lacs ,
Maximum loan –Rs.35 lacs
The assessee does not own any other residential house property.
Mr. Arvind submits the following details w.r.t house property.
Determine Income from House Property

Annual rent – Rs.240000/-

Fair rent – Rs.250000/-
Municipal value – Rs. 220000/-
Standard rent – Rs.260000/-
Municipal taxes paid – Rs3000/-
Interest paid on loan taken for purchase of house property –
Rs.300000/-
1. GAV = RER or ARR whichever is higher
a)RER = Rs.250000/- or Rs.220000/- whichever is higher
subject to Rs.260000/- = Rs.250000/-
b) ARR = Rs.240000/-
Hence GAV = Rs.250000/-

Gross Annual value (GAV) 250000

Less : Municipal taxes paid 3000
Net Annual Value (NAV) 247000
Less: Deductions u/s 24
Standard deduction (30% of NAV) 74100
Interest on borrowed capital 300000 374100
Income from house property (127100)
Adjustment for vacancy loss
Particulars Case 1 Case 2 Case 3 Case 4
Municipal Value (annual) 75000 60000 75000 75000
Fair Rent (annual) 105000 65000 120000 65000
Standard Rent (annual) 100000 70000 - 70000
Actual Rent Received/ Receivable 120000 120000 105000 120000
(annual)
Vacancy period nil nil 2 months 2 months

RER 100000 65000 120000 70000

ARR ( w/o adjusting vacancy ) 120000 120000 105000 120000
Higher of the two 120000 120000 120000 120000
Less: loss due to vacancy nil nil 17500 20000
GAV 120000 120000 112500 100000
Kapil owns a house property which has a fair rental value of
Rs.350000/-. The property was given on rent @ Rs. 30000 p.m,
however the tenant vacated it on 30/08/19. The property was
then rented to another tenant from Jan 2020 onwards @
Rs.40000 p.m. Determine the income taxable under House
Property.
The Annual Value of SOP is taken as nil

Computation of income from Self Occupied Property

Gross Annual value Nil

Less : Municipal taxes paid Nil
Net Annual Value Nil
Less: Deductions u/s 24
Standard deduction (30% of NAV) Nil
Interest on borrowed capital ( upto Rs.2lacs) xxx
Income from house property ( xxx )
If the assessee has one SOP , then

i. If one property is used for self residence – nothing

is taxable
ii. If one property is not used for residence on account
of employment/business – nothing is taxable
iii. If one part of property is used for self residence and
other part is let out – Self occupied part will not be
taxed and the let out part will taxed as per
provisions for LOP
iv. If the property is self occupied for part of the year
and let out for remaining part of the year – no
concession. The house will be taxed as LOP.
If the assessee has two SOPs , then

i. If property is used for self residence – nothing is

taxable
ii. If property is not used for residence on account of
employment/business – nothing is taxable
iii. If part of property is used for self residence and other
part is let out – Self occupied part will not be taxed
and the let out part will taxed as per provisions for
LOP
iv. If the property is self occupied for part of the year
and let out for remaining part of the year – no
concession. The house will be taxed as LOP.
If the assessee has more than two SOPs , then Only two
houses as per the choice of the taxpayer is treated as SOP.
Other remaining property will be treated as Deemed to be
Let Out and income will be calculated as per the provisions
for LOP
1. Mudra owns a residential house in Pune which is let out on a
monthly rent of Rs.45000/- . She incurs the following expenses on
the house :

Municipal tax – Rs.3400

Repairs – Rs.7800
Painting – Rs.4000
Watchman’s salary – Rs.12000
Interest on loan taken from HDFC for the house – Rs.260000
Principal amount repayment of the loan – Rs.120000

Determine Income from house property assuming that RER of the

house is Rs.450000.
2. Arun owns a house used for his self residence. The RER of
the house is Rs.280000. He paid municipal taxes of
Rs.15000 during the year. Other expenses incurred by him
: Repairs : Rs.5600, Fire insurance – Rs.4500, Interest on
loan taken for construction of the house : Rs.200000.

Determine his income from house property

3.Dilip owns a big house 50% of which is let out on a monthly
rent of Rs 22000. The remaining part of the house is used by
him for his residence.

Fair rent of the house : 470000

Municipal taxes paid : Rs.17000
Repairs : Rs.30000
Interest on loan taken for purchase of the house : Rs.230000

Determine his income from house property

ns three houses – two in Mumbai and other in Delhi.
e used by him for self residence.

hich property should be considered as DLOP

come from house property from the following data :
House 1 House 2 House 3

450000 600000 800000

id 20000 30000 35000
15000 10000 5000
n 24000 30000 2000
- 225000 400000