Income from House Property

If anyone has a house either rented or kept vacant, you need to need about Income from House Property for filing of Income Tax Return. This is also important for Tax Saving if you are preparing for Home Loan taken for the same property against the income from house property.

Let’s us know which income shall be considered in Income From House Property

1. Income from letting out of Residential House
2. Income from letting out of Shops
3. Income from letting out of Cinema Building
4. Income from letting out of a workshop
5. Income from letting out of hotel building
6. Income from letting out of house property (the term house property shall include not only the building but also the lands appurtenant thereto i.e the term house property shall include even any open land which is part and parcel of the building.

Computation of Income From House Property 

*Calculation of Income Annual Let able Value

Deduction From Annual Value (Section 24)

1. There is two deductions from the annual value they are:-. 

1.  30% of the Net annual value as a deduction under section 24(a)
2. Interest on borrowed capital

• Interest for the pre-construction period i.e the period prior to the previous year in which property is acquired or construction is completed. This interest can be claimed as a deduction over a period of 5 years in equal annual installments.
• Interest for the year in which construction is complete/ property is acquired. this interest can be claimed fully claimed in the year in which property is acquired or construction is complete.

Deduction of Principal Repayment (Section 80C)

The deduction to claim principal repayment is available for up to Rs. 1, 50,000 within the overall limit of Section 80C.

Condition to claim the deduction :

• The home loan must be for purchase or construction of a new house property
• The property must not be sold in five years from the time you took possession. 

Stamp duty and registration charges Stamp duty and registration charges and other expenses related directly to the transfer are also allowed as a deduction under Section 80C, subject to a maximum deduction amount of Rs 1.5 lakh. Claim these expenses in the same year you make the  payment on them.on them.

Deduction for first time Homeowner (Section 88EE)

A key feature of this section  

• The deduction under this section is available only to individuals.
• The deduction is up to 50000 is over and above the 2 lakh limit under section 24 of the income tax act.  

Condition to claim the deduction 

• To claim this deduction, you should not own any other house.
• The loan has been sanctioned by Financial institution during the financial year 2016-17
•  The amount of loan sanctioned does not exceed Rs 35,00,000
• A loan from a  financial institution only.
• The value of the house is not more than 50 lakhs.

Deduction for interest paid on housing loan taken for affordable housing [Section 80EEA]

With an objective to provide an impetus to the ‘Housing for all’ initiative of the Government and to enable the home buyer to have low-cost funds at his disposal, the Finance (No. 2) Act, 2019 has inserted a new Section 80EEA under the Income-tax Act for those individuals who are not eligible to claim deduction under Section 80EE. An individual can claim deduction of up to Rs. 150,000 under section 80EEA subject to following conditions:

• The Loan should be sanctioned by the financial institution during the period beginning on 01-04-2019 and ending on the 31-03-2020
• Stamp duty value of residential house property should not exceed Rs. 45 lakhs
• The assessee should not own any residential house property on the date of sanction of loan
• The assessee should not be eligible to claim deduction under Section 80EE.

Tax Benefits on Home Loans for Joint Owners

The joint owners, who are also co-borrowers of a self-occupied house property, can claim a deduction on interest on the home loan up to Rs 2 lakh each. And deduction on principal repayments, including a deduction for stamp duty and registration charges under Section 80C within the overall limit of Rs.1.5 lakh for each of the joint owners. These deductions are allowed to be claimed in the same ratio as that of the ownership share in the property.