Rental Income – How much is chargeable to tax?
Rental income from a self-owned property being building or land appurtenant thereto is charged to tax under the head “Income from house property” in the hands of the owner.
It is essential for taxpayers to understand the tax laws and regulations related to rental income to ensure they are complying with the rules and maximizing their tax benefits.
Computation of rental income chargeable to tax under the head “Income from house property” is as under:
Actual Rent or Expected Rent xxxx
Less: Municipal taxes xxxx
Net Annual Value (NAV) xxxx
Less: 30% of NAV (Adhoc deduction) xxxx
Less: Interest on housing loan xxxx
Income from House Property xxxx
I have paid maintenance expenses, repair costs and misc expenses in relation to the let-out property. Will I get the deduction for the same?
No, there is no separate deduction for the maintenance or repair cost borne by the owner. However, the 30% ad-hoc deduction covers all such expenses.
I have bought a house where I live out of bank loan. How much interest on housing loan can be claimed as deduction?
Since the property is self-occupied, total interest on loan, which can be claimed as deduction, cannot exceed Rs. 2,00,000. In addition to this, deduction under section 80EEA of Rs. 1,50,000 can be claimed subject to certain conditions specified therein.
Can I claim interest paid to friends/relatives on loan as deduction from rental income?
Yes. If the loan is taken for the purchase or construction of the house, then interest thereon can be claimed as deduction.
What is self-occupied property?
House property that the owner throughout the year occupies is treated as self-occupied property.
What is deemed rental income?
When a person owns more than one house, then the second and subsequent properties are considered as deemed to be let out. As a result, fair market value of the rental income is chargeable to tax, even if no actual income is earned thereon.
