Income-House Property- Summary

Income from House Property
The term house property includes any building and lands appurtenant thereto i.e. if there is any land which is essential part of the building will be considered to be house property and will not include any plot of land. Income from such house property is taxable in the hands of the owner or the deemed owner.
In case where house property is owned by two or more persons (co-owners) and their respective shares are determinate, the share of each co-owner will be included in his respective total income.

Income from house property shall include income from letting out of house property. Any income from sale – purchase of house property or subletting will not be income from house property.

House property shall not include the following:

a) Vacant Land – Vacant piece of land not forming part of building shall not be house
property.
b) Sub-letting - Income from subletting of house property shall be taxable under head
Other sources.
c) Business use – Property held by the assessee for the use in his own business or
Profession income shall not be taxable under house property.

Computation of Income From House Property

Income of the house property shall be computed in the manner given below:

Gross Annual Value
Less Municipal Taxes

Net Annual Value

Less Statutory Deduction U/s 24(a)
[30% of NAV]

Interest on Capital Borrowed
[U/s 24(b) maximum to Rs. 150000
in case of self occupied houses]

Income from House Property

The bonafide annual rental value of a property is the starting point for the computation of income from house property.

Annual Value (ALV) means reasonable rental value of a house and for determining it following four rents are considered

1. Fair rent
2. Municipal Valuation
3. Standard Rent under Rent Control Act
4. Rent Received/Receivable

Rent received/receivable means rent actually received or due for period of tenancy during a previous year. Period of vacancy for any part of year shall not be considered for computing rent received/receivable.

For computing ALV a house property can be divided under following 4 categories:

a) For the houses which are let out throughout the year or houses which are partly let out and partly vacant or houses which are vacant throughout the year, covered under Sec 23(1)

b) One House which is self occupied, covered under Sec 23(2)

c) Houses which are partly let out and partly self occupied and may or may not be vacant, covered under Sec 23(3)

d) More than one house which are self occupied, covered under Sec 23(4)

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