Income from House Property — Tax Calculation & Section 24 Deduction (FY 2025-26)

Updated: 3 June 2026 | Section 22–27, 24(b) — Income-tax Act, 2025 | AY 2026-27

Income from house property is computed as: GAV − Municipal Taxes = NAV → NAV − 30% standard deduction − Home loan interest = Taxable income. For self-occupied property, GAV = Nil and only Section 24(b) interest deduction of ₹2 lakh is allowed. From FY 2019-20, you can declare up to 2 properties as self-occupied. House property loss up to ₹2 lakh can be set off against salary income.

₹2L

Section 24(b) interest deduction — ₹2 lakh limit for self-occupied property
No limit for let-out property. Loss set-off against salary also capped at ₹2 lakh/year. Excess loss carries forward 8 years.

⚠

Section 24(b) is available in old regime only. Home loan interest deduction for self-occupied property is not available under the new tax regime. Under the new regime, house property income computation still applies for let-out properties, but no deduction for SOP interest is allowed.

Self-Occupied vs Let-Out Property — Tax Treatment Comparison

Aspect	Self-Occupied Property (SOP)	Let-Out Property
Gross Annual Value (GAV)	Nil (deemed as zero)	Higher of (actual rent received) and (fair rent or municipal valuation)
Municipal taxes deduction	Not applicable (GAV = 0)	Deductible if actually paid during the year
Net Annual Value (NAV)	Nil	GAV minus municipal taxes paid
Standard deduction (Sec 24(a))	Not applicable	30% of NAV — no bills needed, flat deduction
Interest on home loan (Sec 24(b))	Max ₹2,00,000 (old regime only)	Unlimited (full interest allowed)
Pre-construction interest	1/5th per year for 5 years (within ₹2L overall limit for SOP)	1/5th per year for 5 years (included in unlimited interest deduction)
Number of properties allowed	Up to 2 properties from FY 2019-20	Any number of properties
Resulting loss set-off	Up to ₹2L vs salary (old regime only); no set-off in new regime	Up to ₹2L vs other heads; balance carried forward 8 years
Section 80EEA additional benefit	₹1.5L extra deduction (first-time buyer, stamp duty ≤₹45L, loan sanctioned 1 Apr 2019–31 Mar 2022)	Not applicable

Step-by-Step Calculation — Let-Out Property Example

Scenario: You have rented out a flat in Pune. Annual rent received = ₹3,00,000. Municipal taxes paid = ₹12,000. Home loan interest paid = ₹1,80,000. Fair rental value = ₹2,80,000.

Income from Let-Out House Property — FY 2025-26

Annual Rent Received	₹3,00,000
Fair Rental Value (Municipal Valuation)	₹2,80,000
Gross Annual Value (GAV) — higher of above two	₹3,00,000
Less: Municipal Taxes Paid	− ₹12,000
Net Annual Value (NAV)	₹2,88,000
Less: Standard Deduction — 30% of NAV (Section 24(a))	− ₹86,400
Less: Interest on Home Loan (Section 24(b)) — full ₹1,80,000 allowed for let-out	− ₹1,80,000
Taxable Income from House Property	₹21,600

This ₹21,600 is added to total income and taxed at applicable slab rate. If the result had been negative (loss), set-off against salary would be capped at ₹2 lakh.

Loss from House Property — Set-Off and Carry-Forward Rules

Many home loan borrowers end up with a net loss from house property (interest paid exceeds NAV). Here is how the loss is treated:

Situation	Set-off Treatment	Carry-Forward
Loss from self-occupied property (due to Sec 24(b) interest)	Set off against salary/other income up to ₹2 lakh per year (old regime only)	Excess beyond ₹2L cannot be carried forward (SOP)
Loss from let-out property	Set off against salary/other income up to ₹2 lakh per year	Remaining loss carried forward for 8 years — set off against future house property income only
New tax regime — house property loss	Loss from self-occupied property: NOT available in new regime. Let-out property loss: can be set off against other house property income but NOT against salary	Limited applicability

Section 24(b) — Pre-Construction Interest Deduction

If you took a home loan during the construction phase of the property, the interest paid during the pre-construction period (from loan disbursement date to 31 March preceding the year of completion) is called pre-construction interest. This is deductible in 5 equal installments starting from the financial year in which the property was completed and possession was taken. For a self-occupied property, the total deduction (regular annual interest + 1/5th of pre-construction interest) is still subject to the overall ₹2 lakh cap under Section 24(b). For let-out properties, the full pre-construction interest in 5 installments is deductible without any limit.

Frequently Asked Questions

How is income from house property calculated in India?

Income from house property is calculated as: Gross Annual Value (GAV) minus Municipal Taxes paid = Net Annual Value (NAV). Then subtract 30% standard deduction on NAV and interest on home loan (Section 24(b)). For a self-occupied property, GAV is taken as Nil, so you can only claim the Section 24(b) interest deduction of up to ₹2 lakh. For a let-out property, GAV is the higher of actual rent received and the fair rent (or municipal value), minus municipal taxes paid, minus 30% standard deduction, minus unlimited interest on home loan (though any resulting loss can only be set off against other income up to ₹2 lakh per year).

What is the Section 24 deduction limit for home loan interest?

Section 24(b) of the Income-tax Act, 2025 allows deduction of home loan interest. For a self-occupied property, the maximum deduction is ₹2,00,000 per financial year. If the home loan was taken before 1 April 1999, the limit is ₹30,000. For a let-out property, there is no upper limit on the interest deduction — the full interest paid is allowed. However, if the let-out property results in a net loss after claiming the interest, that loss can only be set off against other income (such as salary) up to ₹2 lakh per year. The remaining loss is carried forward for 8 years and set off against future house property income.

Can I show 2 properties as self-occupied?

Yes. From FY 2019-20 onwards, the Income-tax Act allows an individual to declare up to 2 properties as self-occupied. For both self-occupied properties, the Gross Annual Value is treated as Nil (no notional rent is taxed). You can claim Section 24(b) interest deduction of up to ₹2 lakh on each property separately if each has a separate home loan — however, the combined deduction across both loans is still capped at ₹2 lakh in total for self-occupied properties. If you own 3 or more properties, any additional properties beyond 2 are treated as deemed let-out and notional rent must be computed and taxed.

How much house property loss can be set off against salary in a year?

Loss from house property (typically arising from home loan interest deduction exceeding NAV on a self-occupied property) can be set off against salary income up to a maximum of ₹2,00,000 per financial year. This ₹2 lakh cap applies regardless of the actual loss amount. If your home loan interest on a self-occupied property is ₹5 lakh, you can still only claim ₹2 lakh against salary (the remaining ₹3 lakh loss cannot be set off and cannot even be carried forward since it exceeds the limit). For let-out properties, the full loss can be computed, but set-off against salary is still limited to ₹2 lakh per year, with the excess carried forward for 8 years against future house property income.

80C Deductions Income Tax Slabs 2025-26 Income Tax Calculator Tax on FD Interest Old vs New Regime ITR Filing Due Date

Optimise Your House Property Tax with a TaxClue Expert

Home loan interest deduction, let-out vs self-occupied optimisation, and loss set-off against salary — get the maximum benefit with expert ITR filing.

File ITR with Expert Help →

◆ Available in 71 Cities

House Property Income Near You

Expert CA/CS assistance for house property income across India. Click your city for local details.

→ New Delhi → Mumbai → Bengaluru (Bangalore) → Hyderabad → Chennai → Kolkata → Pune → Ahmedabad → Noida (UP) → Gurgaon (Gurugram) → Jaipur → Lucknow → Chandigarh → Surat → Kochi (Cochin) → Faridabad → Ghaziabad → Greater Noida → Panipat → Sonipat → Manesar (IMT) → Dharuhera → Mathura → Palwal → Agra → Kosi Kalan → Aligarh → Khair → Jewar (Noida International Airport) → Kanpur → Varanasi (Kashi) → Prayagraj (Allahabad) → Meerut → Bareilly → Moradabad → Gorakhpur → Firozabad → Saharanpur → Muzaffarnagar → Bulandshahr → Hapur → Karnal → Kurukshetra → Ambala → Hisar → Rohtak → Yamunanagar → Rewari → Bhiwani → Jodhpur → Udaipur → Kota → Ajmer → Bikaner → Ludhiana → Amritsar → Jalandhar → Patiala → Mohali (SAS Nagar) → Bathinda → Dehradun → Haridwar → Rudrapur → Shimla → Solan (Baddi-Barotiwala-Nalagarh) → Bhopal → Indore → Gwalior → Jammu → Srinagar → Panchkula

Ask Veda