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| Self occupied property If you own a house property and use it as your own residence, you do not have to pay any tax on such property. But if you have taken a loan for buying this house, you get a deduction of up to Rs 1.5 lakh every year on the interest paid. That means, while you do not have any income from this property, you get a deduction of Rs 1.5 lakh, thus, giving you negative income or loss from property. This loss can be set-off against any other income such as salary or business income. House given on rent Rent received from letting out a house on lease is taxable under this head of income. However, the income tax laws allow you to claim certain deductions from the total rent received before you add it to your taxable income. That is because, if you are renting out a property, you maybe incurring expenses towards repairs and maintenance of that property. Hence, these expenses are deductible. The following is the list of expenses that can be deducted: 1. 30% of the annual value of your property can be deducted 2. If you have taken a loan to buy the leased property, then you can deduct the amount of interest paid on the loan up to Rs 1.5 lakh. If you have taken a loan for repairs or reconstruction, the interest on that is also deductible However, an important point to remember is that if the rent received is less than the annual value, then the annual value will be considered for tax purposes.House other than occupied for residence but not given on rent either If you own more than one house property, then the one that is not your permanent place of residence will be liable to be taxed. If you own two houses and if you are occupying one house for some part of the year and another for the rest, then you must choose one of the two properties as self-occupied. The other would be liable to be taxed. Your choice would mainly depend on the annual value. Lower the annual value, lesser the tax. For calculating tax for such unoccupied house, you would first have to arrive at annual value. Annual value is the amount that could have been earned, had the property been given on rent. From the annual value, certain deduction would be made. That is because, if you own a property, you maybe incurring expenses towards repairs and maintenance of that property. Hence, these expenses are deductible. The following is the list of expenses that can be deducted: 1. 30% of the annual value of your property can be deducted 2. If you have taken a loan to buy the leased property, then you can deduct the amount of interest paid on the loan up to Rs 1.5 lakh. If you have taken a loan for repairs or reconstruction, the interest on that is also deductible |
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