How To Calculate Self Occupied Rent & Let Out Rent Income Tax

Assess is having more than one self-occupied property-(Assess property occupied एक से अधिक स्वयं चल रहा है) one property is self-occupied and all property is let out

Step1.  Assume both house are let out (ye man le ke dono ghar let out h to income inke hisab se nikalo)

Step2. Assume both house are self-occupied (ye man le ke done ghar self occupied h to income in ke hisab se nikalo)

Assume that  House is self occupied

EXAMPLE=Y has a house, which has 2 equal units on the ground and the 1^st Floor. Unit 1 on the ground floor is self-occupied by Y and used fully for residential purposes. Unit 2 on the 1^st floor has been let out. Rs 6,000 is the rent received per month. Reasonable rent of the property is Rs 5,000 per month. Taxes paid to municipality are Rs 10,000. Rs 5,000 are the repairs incurred by Y. And Rs 20,000 is the interest on money borrowed to construct the house.

Unit 1 Self Occupied

Gross Annual Value                                        Nil

Municipal Taxes                                               Nil

Net Annual Value                                            Nil

Less: Interest (50% of 20,000)                     -10,000

Loss from house property                            -10,000 (A)

Assume that that house is let out

Unit 2 Let Out

Gross Annual Value                                        72,000

Less: Municipal Taxes (50% of 10,000)     -5,000

Net Annual Value                                            67,000

Less: standard deduction @30%                -20,100

Less: Interest                                                     -10,000

Income from House Property                     36,900 (B)

What if property is let out for some months of the year? In case the property is let out for a part of the year – Income from house property will be calculated as if the property has been let out for whole of the year.  This will no longer be treated as a self-occupied property, even though for the remaining part of the year you may have used it for self-residence purposes.

Example – Z has a property in Jaipur. The house has been let out from 1^st April 2013 to 31^st December 2013. Rent Received is Rs 10,000 per month.  Municipal taxes paid by Z are Rs 5,000. Interest for the financial year on money borrowed is Rs 60,000.

Gross Annual Value                                        90,000

Less: Municipal Taxes                                     -5,000

Net Annual Value                                            85,000

Less : standard deduction @30%               – 25,500

Less : Interest                                                    – 60,000

Loss from House Property                                 – 500

Let out                                              self-occupied

House1                                             house2

Loss from house property  -10000(a)                 Income from House Property     36900(b)

Both are comparing and lowest amount paid income tax.