1. Basics of House Property Tax
A house building can be your home, office, shop, building or a place connected to a building such as a car park. The Income Tax Act does not distinguish between commercial and residential property. All types of property are taxed under the heading ‘income from property’ in return for income tax. The owner for the purpose of income tax is its legal owner, a person who can exercise the rights of the owner himself and not on behalf of another person. Where the property is used for business or professional purposes or to earn a living - it is taxed under ‘business and employee income’. Repair and maintenance costs are allowed as business expenses.
a. Self-Occupied House Property
Personal property is used for personal purposes. This could be a taxpayer family - parents and / or spouse and children. An unoccupied house building is considered to be self-contained for the purpose of Income Tax.
Prior to FY 2019-20, if more than one residential property is owned by a taxpayer, only one is considered a residential property and the rest is considered to have been evicted. Choosing which location to choose as a resident rests with the taxpayer.
In FY 2019-20 onwards, the benefit of viewing these houses as individuals has been expanded to 2 houses. Now, a homeowner can claim 2 of his or her living quarters as a residual income for the purposes of Income Tax purposes.
b. Let Out House Property
A rental house for a year or part of a house is considered a rented house for the purpose of income tax.
c. Inherited Property
Inherited property ie bequeathed to parents, grandparents, etc., may also be your property or disposal based on its use as discussed above.
2. How to calculate Income From House Property
Here is how you compute your income from a house property:
Frequently Asked Questions
Is local rental income taxable?
Yes, a property is taxed on the basis of its annual rental income.
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