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Unit 3

Under the Income Tax Act, 1961, 'House Property' includes any building or connected land owned by the assessee and used for residential, commercial, or rental purposes. Income from House Property is taxed if the property is owned by the assessee and not used for business. Types of house property include self-occupied, let-out, and deemed to be let-out, with specific criteria for ownership and income computation outlined in the document.

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6 views3 pages

Unit 3

Under the Income Tax Act, 1961, 'House Property' includes any building or connected land owned by the assessee and used for residential, commercial, or rental purposes. Income from House Property is taxed if the property is owned by the assessee and not used for business. Types of house property include self-occupied, let-out, and deemed to be let-out, with specific criteria for ownership and income computation outlined in the document.

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greninja6826
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© © All Rights Reserved
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Meaning of House Property under Income Tax Act, 1961

Under the Income Tax Act, 1961, the term “House Property” refers to any building or land appurtenant thereto (i.e.,
connected land such as a courtyard, garden, parking space, etc.) that the assessee owns and uses for residential,
commercial, or rental purposes.

Key Points:
1.Definition (Section 22 to 27):
Income from House Property is taxed under the head “Income from House Property” if:
1. The assessee is the owner of the property.
2. The property consists of any building or land appurtenant thereto.
3. The property is not used for business or profession carried out by the assessee.
Types of House Property:
•Self-occupied Property: Used by the assessee for own residence.
•Let-out Property: Rented out to someone else.
•Deemed to be let-out: More than two properties are owned and not let-out — only two can be treated as self-
occupied; rest are deemed to be let-out.

Land Not Covered Alone:


Only land appurtenant to a building is included. Vacant land, agricultural land, or open plots are not taxed under this
head.

Ownership Criteria:
•Legal ownership is sufficient.
•Co-owners are taxed in their share.
•Deemed owners (e.g., holder of lease rights for >12 years, transfer to spouse without consideration) are also taxed.
Income from Let Out House Property – Computation Table

Particulars Amount (₹)


1. Gross Annual Value (GAV)
a. Fair Rent
b. Municipal Value
c. Standard Rent (if applicable)
d. Expected Rent = Higher of (a or b), capped at (c)
e. Actual Rent Received or Receivable
f. GAV = Higher of (d) and (e)
2. Less: Municipal Taxes Paid (if paid by owner) (–)
----------------
3. Net Annual Value (NAV)
----------------
4. Less: Deductions under Section 24
a. Standard Deduction @30% of NAV (–)
b. Interest on Borrowed Capital (Actual Amount) (–)
----------------
5. Income from House Property

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