Income From House PropertyBased on the information given in the site link, computation of income from house property depends upon whether the house property is given on rent or is self-occupied. So it is explained separately for both the situations.

Computation of income from a let out property

Due to the use of Internet in today’s world it has become quite easy for anyone in the world to buy, sell or rent a house using an online London Realtor or any other house realtor of any country from around the world with just a few clicks. If you have a property that you wish to sell, you can click here to learn how to sell your house quickly and effortlessly. A house property which is rented for the whole or a part of the year is considered a let out house property, according to the Income Tax Department. Income from a let out property is computed in the following manner:

Particulars Amount
Gross annual value(GAV) ——-
Less:- Municipal taxes paid during the year ——-
Net annual value(NAV) ——-
Less:- Deduction under section 24  
·         Deduction under section 24(a) @ 30% of NAV (Standard Deduction) ——-
·         Deduction under section 24(b) on account of interest on borrowed capital ——-
Income from house property ——-

To compute GAV for a let out property following steps ate to be followed:

Step 1: Compute reasonable expected rent for the property

Expected rent will be the higher of the following:

If a property is covered under Rent Control Act, then the reasonable expected rent cannot exceed standard rent (Under the Rent Control Act, a standard rent is fixed and owners cannot receive rent higher than that specified in the Rent Control Act. This Act ensures that owners are paid a fair rent, tenants are not exploited and are protected from eviction).

Step 2: Compute actual rent of the property.

Actual rent means the rent for which the property is let out during the year. From the actual rent unrealized rent (rent not paid by the tenant), if any is to be deducted.

Step 3: Compute gross annual value

Gross annual value of a property will be higher of the amount computed at step 1 or step 2.

Computation of gross annual value in the case of a property which is vacant for some time during the year

Where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the reasonable expected rent than the actual rent so received or receivable (as reduced by the vacant allowance) shall be considered to be the Gross Annual Value of the property.

After computation of GAV municipal taxes, if paid by the owner are to be deducted from GAV to get NAV.

To ascertain income from let out property deduction under section 24 is to be deducted from NAV.

Computation of income from a self-occupied house property

What does a self-occupied house property mean?

A self-occupied house property is a property which is used for one’s own residential purposes. A property will be considered a self-occupied property when it is used by the owner’s family – parents and/or spouse and children. A vacant house property is considered as self-occupied for the purpose of Income Tax.

If more than one self-occupied house property is owned by an individual, only one is considered and treated as a self-occupied property and the remaining are assumed to be let out. The choice of which property to choose as self-occupied is up to the individual.

Income from a self-occupied house property is computed in the following manner:


Gross annual value(GAV) NIL
Less:- Municipal taxes paid during the year NIL
Net annual value(NAV) NIL
Less:- Deduction under section 24  
·         Deduction under section 24(a) @ 30% of NAV (Standard Deduction) NIL
·         Deduction under section 24(b) on account of interest on borrowed capital ——-
Income from house property ——-

NAV for a self-occupied house property will be NIL as there is no rental income. The income from house property will either be NIL or it will be negative. If it is negative then it will be a loss of house property which can be set off from the other incomes of the individual.

Deduction under Section24 (a) is not available and deduction under Section24 (b) is available to the extent of either Rs.30000 or Rs. 200000 depending on the situations.

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