New Delhi: House property serves as a significant source of income for millions of individuals in India.
In accordance with the Income Tax Act of 1961, income generated from house property is subject to taxation.
The individual who legally owns the property and receives the payment is responsible for paying the applicable taxes.
House property encompasses various types of properties, such as residential houses, offices, shops, or attached land, and the Income Tax Department treats residential and commercial properties equally.
What are the rules?
All types of properties fall under the category of “Income from house property” for income tax purposes.
However, if a property is utilized for business or any other profession, it is taxed under the category of “Income from business and profession.”
The taxable value of a property falling under the house property category is determined as its annual value.
How is the calculation done?
The rules for taxing income from house property are outlined in Sections 22 and 27 of the Income Tax Act.
According to Section 24 of the Act, income from house property is calculated after applying a standard deduction of 30% to the rent received.
Additionally, you can claim deductions for loans taken for purchasing, constructing, renovating, or repairing the property.
In the case of a self-occupied house, you can claim a maximum deduction of Rs 2 lakh for two self-occupied properties combined.
Rules concerning joint loans
The annual value of the property is considered as income from house property, and taxes are calculated based on this value.
If a husband and wife have jointly taken a home loan, both individuals can claim deductions for both the principal and interest portions of the home loan.
