Calculate taxable income from house property in India for ITR. Covers self-occupied (nil annual value, Rs 2L interest deduction) and let-out (net annual value, 30 percent standard deduction).
Compute taxable income from house property for your ITR (Schedule HP).
Taxable HP income (or loss)
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Net annual value
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Standard deduction (30%)
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Interest deduction
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Your breakdown
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Amount
Schedule HP computation: step by step
For a let-out property: start with gross annual rent. Subtract municipal taxes paid by you (not by tenant) to get Net Annual Value. Subtract 30 percent standard deduction on NAV (Section 24(a)) to get income after standard deduction. Subtract full actual loan interest (Section 24(b)) to get taxable HP income. If the result is negative, it is a house property loss which may be set off against other income up to Rs 2 lakh under the old regime. For a self-occupied property, annual value is nil, so the only entry is the loan interest deduction up to Rs 2 lakh (old regime) or nil (new regime).
New regime eliminates most HP deductions
Under the new tax regime, which is now the default, the Section 24(b) deduction for home loan interest on a self-occupied property is not available. This can significantly increase taxable income for homeowners with large home loans. However, for let-out properties, the Section 24(b) deduction on actual interest is still available under the new regime, but the ability to set off house property loss against salary is restricted. This asymmetry means that property investors who rent out their property may still benefit from the standard deduction and full interest deduction even under the new regime.
Multiple properties and deemed let-out
If you own more than one residential property, only one can be treated as self-occupied. All other properties are deemed to be let out, even if they are vacant or occupied by family. For deemed let-out properties, the annual value is taken as the expected rent (municipal valuation or fair market rent), not zero. This can result in phantom income being taxed even though you receive no actual rent. Careful planning of which property to designate as self-occupied (typically the one with the highest expected rent or in the highest-value location) can reduce this phantom income tax burden.
Frequently asked questions
What is annual value of house property in India?
Annual value is the deemed income from owning a property and is the basis for computing income from house property. For a self-occupied property used as a residence, the annual value is nil. For a let-out property, the annual value is the higher of actual rent received and expected rent (municipal valuation or fair rent). The Net Annual Value (NAV) is annual value minus municipal taxes actually paid by the owner during the year. NAV is the starting point for computing taxable income from house property.
How much loan interest can I deduct for a self-occupied property?
Under the old tax regime, Section 24(b) allows deduction of actual home loan interest up to Rs 2 lakh per financial year for a self-occupied property, provided the loan was taken for purchase or construction. If the construction is not completed within 5 years of the loan, the limit drops to Rs 30,000. Under the new tax regime (default from AY 2024-25), the Section 24(b) deduction for a self-occupied property is not available. This is one of the main reasons many taxpayers with home loans prefer the old regime.
What deductions are available on let-out property income?
For let-out property, deductions under Section 24 include: 30 percent standard deduction on Net Annual Value (a flat deduction for repairs and maintenance, no bills required), and the full actual interest on home loan with no cap. Unlike self-occupied property, there is no Rs 2 lakh limit on interest for let-out property. Municipal taxes paid by the owner are deducted before arriving at NAV. Principal repayment on the home loan qualifies for Section 80C deduction (within the Rs 1.5 lakh overall 80C limit).
Can I set off a loss from house property against salary income?
Under the old regime, loss from house property (which commonly arises for self-occupied properties with high home loan interest) can be set off against other income including salary, but only up to Rs 2 lakh per year. Any unabsorbed loss beyond Rs 2 lakh is carried forward for up to 8 years and can only be set off against future income from house property, not against salary. Under the new tax regime, set-off of house property loss against other income is not permitted, which is another consideration when choosing the regime.