Income from House Property — Section 24, Let-out & Loss Set-off

Gross Annual Value (GAV) is the higher of the expected rent (fair rent or municipal value, subject to any standard rent) and the actual rent received or receivable. For a self-occupied house GAV is taken as Nil. Net Annual Value (NAV) is GAV minus the municipal taxes actually paid by the owner during the year. The 30% standard deduction and Section 24(b) interest are then applied to NAV.

Section 24(a) allows a flat standard deduction equal to 30% of the Net Annual Value, meant to cover repairs, maintenance and collection costs. No bills or proof are needed — it is a fixed percentage. It applies only where NAV is positive (let-out or deemed let-out property); for a self-occupied house NAV is Nil, so there is nothing to apply the 30% to.

For a self-occupied property, Section 24(b) allows home-loan interest up to Rs 2,00,000 per year (Rs 30,000 if the loan was taken before 1 April 1999 or not for purchase/construction). For a let-out property there is no upper limit — the full interest is deductible. However, the loss this creates can be set off against other income only up to Rs 2 lakh a year, with the balance carried forward.

For a self-occupied property, no — the Rs 2 lakh home-loan interest deduction is not available under the default new regime, so you must opt for the old regime to claim it. For a let-out property, interest is still deductible in computing house-property income under both regimes, but a resulting loss cannot be set off against salary in the new regime.

Yes, but they are separate. The interest part of the EMI is claimed under Section 24(b) (up to Rs 2 lakh for a self-occupied house). The principal part is claimed under Section 80C, within the Rs 1.5 lakh 80C ceiling. Both are available only under the old regime, and stamp duty and registration charges also qualify under 80C in the year of purchase.

Interest paid on a home loan during the construction period (from loan disbursement up to 31 March before the year of completion) is pre-construction interest. It is deductible in five equal annual instalments starting from the year the property is completed and possession is taken. For a self-occupied house it sits within the overall Rs 2 lakh Section 24(b) limit; for a let-out property it is added to the unlimited interest deduction.

Yes. Since FY 2019-20 an individual may treat up to two houses as self-occupied, so GAV is Nil for both and no notional rent is taxed. The Section 24(b) home-loan interest deduction across both self-occupied houses remains capped at Rs 2 lakh in total (old regime). If you own three or more houses, the extra ones are treated as deemed let-out and notional rent is computed.

If you own more houses than you are allowed to treat as self-occupied (currently two), the additional houses are "deemed to be let out" even if they are vacant. For each such house, a notional GAV (expected rent) is computed, municipal taxes and the 30% standard deduction are allowed, and the full home-loan interest is deductible under Section 24(b).

Where a property is jointly owned and each co-owner's share is definite and ascertainable, the house-property income is computed for the property as a whole and then apportioned between the co-owners in their ownership ratio. Each co-owner reports their share and claims their share of municipal taxes, the 30% deduction and Section 24(b) interest (subject to the Rs 2 lakh self-occupied cap per co-owner).

A maximum of Rs 2,00,000 per year of house-property loss can be set off against salary and other income heads (Section 71(3A)). This cap applies regardless of the actual loss. For a self-occupied house, any loss above Rs 2 lakh is lost and cannot be carried forward. For a let-out property, the unabsorbed loss is carried forward for 8 years and set off only against future house-property income.

Unabsorbed house-property loss (after the Rs 2 lakh inter-head set-off in the current year) can be carried forward for up to 8 assessment years. In those later years it can be set off only against income under the head house property, not against salary or other income.

Broadly no. Under the new regime, a self-occupied house-property loss (from Section 24(b) interest) cannot be set off against salary, and a let-out property loss cannot be set off against other heads such as salary — it can only be adjusted within house-property income. This is a key reason home-loan borrowers often compare regimes before filing.

Rent from a building (with the land appurtenant to it) that you own is taxed under the head "Income from House Property". Rent from a commercial complex you run as a business, or income from sub-letting a property you do not own, or rent for plant and machinery, is generally taxed under business income or other sources instead. The head decides which deductions apply.

It depends on how many houses you own. Up to two houses can be treated as self-occupied with GAV Nil, so no notional rent applies even if vacant. For the third and further houses (deemed let-out), a notional expected rent is computed and taxed after the 30% deduction and interest, even if the house was actually empty for the year.

Salaried individuals with one house property can generally use ITR-1 (Sahaj). If you own more than one house property, have brought-forward house-property loss, or have capital gains or other income, you will usually need ITR-2. In the return, house-property income (or loss) is reported under the House Property schedule with the GAV, taxes, 30% deduction and interest broken out.