House Property Income

Overview

House property is either Land or Building or area attached to the building. The area could be a courtyard, parking place, or compound. A taxpayer requires to inform income gained from such Property while filing ITR. House property also comprises Residential houses/Flats, Shops, Office Space, Factory sheds, Farmhouses, Godowns, Cinema buildings, Workshop buildings, Hotel buildings, etc. You can file ITR-1 if you have earned income from one house property. However, you need to file ITR-2 if you own more than one house property.

TYPES OF ITR FORM

ITR-1: For Individuals being a Resident (other than Not Ordinarily Resident) having Total Income up to Rs.50 lakhs, having Income from Salaries, One House Property, Other Sources (Interest, etc.), and Agricultural Income up to Rs.5 thousand(Not for an individual who is either Director in a company or has invested in Unlisted Equity Shares).

ITR-2: For Individuals and HUFs do not have income from profits and gains of business or profession.

ITR-3: For individuals and HUFs having income from profits and gains of business or profession

ITR-4: For Individuals, HUFs, and Firms (other than LLP) being a Resident having Total Income upto Rs.50 lakhs and having income from Business and Profession which is computed under sections 44AD, 44ADA or 44AE

ITR-5: For persons other than Individual, HUF, Company (Partnership Firm, Aop / Boi)

ITR-6: For Companies other than companies claiming exemption under section 11

ITR-7: This form is relevant for all people who are required to file tax returns under the Section 139(4A), Section 139(4B), Section 139(4C), Section 139(4D), Section 139 (4E), or 139 (4F) that mainly includes Trust, University, etc.

Due Dates For Filing Income Tax Returns :

Category of Assessee	Due Date
Individual	31st July
Body of Persons (BOP)	31st July
Hindu Undivided Family ( HUF)	31st July
Association of Person (AOP)	31st July
Business (Audit Cases)	30th September

Our Process

Step 1

Discussion and collection of basic information

Step 2

Choosing applicable ITR Form

Step 3

Collection of Documents

Step 4

Computation of Tax Liability

Step 5

Form Filling & Submission

Step 6

Sharing Filled Documents

Choose Your Package

All Inclusive Pricing – No Hidden Fee

Basic
- ₹ 800
- - One Owned House Property
  - Rental Income
  - Housing Loan Repayment
  - Tax Payment Assistance
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Premium
- ₹ 1500
- - More than one House Property
  - Rental Income
  - Housing Loan Repayment
  - Tax Payment Assistance
- Purchase Now

Ultimate
- ₹ 2500
- - More than one House Property
  - Rental Income
  - Housing Loan Repayment
  - Tax Payment Assistance
  - Capital Gain on Sale of Property, Shares, Mutual Fund
  - Profit & Loss From Future & Options or Intra Day
  - Full Year Support for any assistance
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Benefits

Taxable Income

If you have taxable income in India, you must record your ITR in India. This is appropriate for a person if his/her taxable income surpasses INR 2.50 Lakh. In case you are a Company, LLP, or Partnership Firm, you must file ITR irrespective of your profit or loss.

Financial Power

A good track record of consistent ITR Filing shows your financial strength and is significant in your regularity. This serves you to receive instantaneous bank credits and also a visa. Henceforth, it is advisable to file ITR on a routine basis.

Trustworthiness

Filing an ITR improves your reliability and your credit availing capacity from the bank aspect. Even if you are not accountable for ITR filing for any reason, it is a good practice to file the same. Your ITR helps as proof of your Income. No other document does this job.

Tax Refunds

For any reason, if your TDS has been deducted and the same is higher than your exact tax payable, such a refund request can only be done by filing an accurate IT return in time. You won’t notice your returns if you don’t file your ITR.

Move Forward Losses

If you have acquired any losses in your business on account of expenses or reduction, you must file your return to move ahead of those. The advantage of this can be availed once you have taxable income. Such losses, then, can be set off on taxable profits.

Avoiding Tax Notices

There are many measures defined under the Act, in which you may be assisted legal notification if you have not filed your ITR. Filing your ITR precisely and in time can assure you that you don’t have to meet any of these.

Documents Required

Rent Agreement If we are receiving rent from the house

Interest Certificate from Bank In the case of home loans.

Address of the property needs to be shown to claim a deduction

Co-owner details if any need to be furnished and thereby the amount of deduction claimed can be increased.

Receipts of municipality taxes paid.

Form 16A on rent

Details of Pre-construction Interest

Details proving ownership.

Home Loan Processing charges & Foreclosure charges

Clear All Your Doubts !

What is your ‘income from house property’ when you/your family live(s)in it?

If you are using your property for residence throughout the year and it’s not let out or used for any other purpose, it is considered a self-occupied house property. The gross annual value of this property is zero. There is no income from your house property. Since the gross annual value of a self-occupied house is zero, claiming the deduction on home loan interest will result in a loss from house property. This loss can be adjusted against your income from other heads.

I own a house of two floors and run my business out of the Ground Floor. I live on the 1st Floor. How much will I pay in taxes?

The Ground Floor will not be taxed under the “income from house property” head. It shall be taxed under the Business Profession head. The first floor will be treated as a self-occupied house property. Income from house property will be zero in this case.

A house has been self-occupied for six months and rented out for six months. What is its income?

Calculate the gross annual value of the property by finding out its reasonable rent and actual rent collected. If Actual Rent is lower than Reasonable Rent, only because the house was vacant and not for any other reason, take actual rent collected as Gross Annual Value. If Actual Rent is lower than Reasonable Rent because of other factors (say the tenant and the landlord are related), then take reasonable rent as GAV.

Income received as rent from subletting of house property will be taxed under “Income from House Property”?

No. This is because the rental income received by the owner of the property alone is taxed as “Income from House Property”. Rental income in the hands of anyone other than the owner shall be taxed under “Other sources”. Therefore, income from subletting will be chargeable under “Other Sources”.

Can a deduction of interest paid against the loan taken from friends and relatives be claimed from house property income?

Yes. A deduction under Section 24 for interest paid on loan availed from friends or relatives is also allowed from the Net Annual Value. The law nowhere mandates that the loan should have been taken only from a bank to claim this deduction. But here, one must note that the principal repayment in respect of such a loan will not qualify for a deduction under Section 80C.

How does the claim of deduction under Section 24 and Section 80C work if a home loan has been availed for 2 houses?

A taxpayer can claim deduction under Section 24 of interest paid on home loan for each of the houses separately. However, the overall loss from house property that can be claimed for a year is restricted to Rs 2 lakhs. As regards 80C deduction, the principal portion of home loan repaid in respect of both houses can be claimed, however within the overall cap of Rs 1.5 lakhs for each financial year.

What is a self-occupied property, let out property, and deemed let out property?

Self-occupied: This is one where you or your family resides and the question of receiving rental income out of this does not arise
Let Out: This is one which you have given out on rent. Therefore, the rental income would be considered as your income from house property.
Deemed Let out: When a taxpayer owns more than two house property, the law mandates that only two (Before Budget 2019, it was only one property) such properties can be treated as self-occupied while the third one (irrespective of whether let out or not) will be deemed to be let out.

I have incurred a loss from house property. I have missed the return filing deadline. Will I lose the benefit of carrying forward losses incurred

One is supposed to file his return within the due date which is 31 July for most of the individual taxpayers. If this is not done, losses if any, would not be allowed to be carried forward to future years for set off. However, losses from house property are an exception to this rule and can be carried forward to future years even if the return is not filed on time.

I am the owner of a shop space which I have given out on rent. How should I offer such income to tax?

If rent has to be charged to tax under “Income from House Property”, the property that has been given on rent must be a building or a land appurtenant thereto. Since the shop falls under the definition of a building, the rental income from such a shop must be offered to tax under “House Property only”.

I have transferred my flat in the name of my wife as a gift. She receives a monthly rental from this flat. Should she offer this as her income?

Since the flat has been given to your wife as a gift i.e. for nil consideration, you will be considered as the “deemed owner” of the house and the income from renting the flat will be clubbed in your hands and you must offer the same to tax as house property income.

I have received an unrealized rent which was arrears in earlier years. What will the tax treatment for such realization of arrears of rent?

Since the unrealized rent was excluded from “Income from house property” in the previous years due to non-realization, you will have to include this income in the year of receipt of arrears of rent. It is not necessary to be the owner of the property in the year of receipt. You can also deduct 30% of such rent while charging it to income tax.

I have 6 separate let-out properties. Should I calculate the house property income for each property or by clubbing all the rental receipts in one calculation?

The calculation will have to be made separately for each of the properties.

How to compute income from a house property, when part of the property is self-occupied and part is let-out?

If a house property consists of 2 or more units, one of which is self-occupied and the remaining units are let-out then all the units will be treated as independent units and income from those units will be computed in the following manner: a. Income from units occupied by the owner will be computed as Self Occupied property income and. Income from unit let-out by the owner will be treated as let-out property income

How to claim both HRA and a home loan?

HRA exemption (section 10-13a) and deduction for home loan installment (section 80C) and interest are governed by different sections. And hence employees can claim both of them. House rent allowance is to be claimed either by submitting proofs like rent receipts and rent agreement to the employer before the end of the year. Here it is to be noted that HRA cannot be claimed if you are a joint owner of the property and paying rent to the other owner or employee rents out the employer’s property and pays him the rent. But please note that this situation can be monitored closely by the income tax department and the department may disallow the claims if proper documents or explanations are not available.

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