How to calculate tax on house property income
(Deduction under Section 24)
Serial No
|
Particulars
|
Amount or Percentage Deduction
|
1
|
Standard Deduction
|
30%annual value
|
2
|
Property acquired/constructed after
1st April, 1999 with borrowed capital (deduction is allowed only where such
acquisition or construction is completed within 3 years from the end of the
financial year in which capital was borrowed
|
200000(max)
|
3
|
in other case Borrowed capital
|
30000(max)
|
4
|
In case of property let out
|
Fully deduction of Interest on borrowed capital
|
Interest for the period prior to
the acquisition or construction of the premises would be deductible in five
equal installments starting from the year in which property is
acquired/constructed (possession).
Tax Planning for Income from House property
You can minimize your tax out go in the following cases:-
(1) Owing more than one property: – If you own more than one property, then only one house of your choice will be considered as self-occupied and others will be considered as let out or Deemed to be let out (if not let out). Therefore, you should carefully evaluate and choose a property with less tax liability.
Illustration:-
If Shiva has two houses than he can choose one which will minimize his tax liability.
Tax Planning for Income from House property
You can minimize your tax out go in the following cases:-
(1) Owing more than one property: – If you own more than one property, then only one house of your choice will be considered as self-occupied and others will be considered as let out or Deemed to be let out (if not let out). Therefore, you should carefully evaluate and choose a property with less tax liability.
Illustration:-
If Shiva has two houses than he can choose one which will minimize his tax liability.
Particulars (If Deemed Let out)
|
House 1
|
House 2
|
Annual Value
|
3,60,000
|
7,00,000
|
Less: (Municipal Taxes)
|
(40,000)
|
(54,000)
|
Net Annual Value (NAV)
|
3,20,000
|
6,46,000
|
Deductions u/s 24
|
||
(a)
30% of NAV |
(96,000)
|
(1,93,800)
|
(b)
Interest on borrowed capital |
(1,75,000)
|
(2,50,000)
|
Income from House Property
|
49000
|
2,02,200
|
If Shiva considers House 1 as Self-occupied and House 2 as deemed to be let-out then his income from house property will be Rs. 52,200 and it will be negative Rs. (1,01,00) vice-versa. Therefore, he should consider House 1 as deemed let out and House 2 as self –occupied.
(2) Joint Home Loan: – If you are a Joint owner and also apply for a joint home loan then both the co-borrowers can take a maximum deduction of 150000 each.
(3) First house is in a single name and planning a second home: – If your first home is in single name then you can buy a second home in your spouse’s name to help you avoid tax on ‘deemed to be let-out’ property.
(4) Joint Ownership: – Income from house property can be divided between both the co-owners which can reduce overall tax liability.
Your home and a meticulous planning can lighten up your tax burden to a great extent.
Interest on borrowed capital (reapre, renewal,reconstruction,purchased etc)
Step 1. Interest on loan =loan*period *rate
12 * 100
Interest on loan will be allowed on Interest as deduction even if be paid ie be bais.
12 * 100
Interest on loan will be allowed on Interest as deduction even if be paid ie be bais.
No comments:
Post a Comment