INCOME FROM HOUSE PROPERTY

SECOND HEAD OF INCOME:

A property can be considered as House Property
when the following conditions are fulfilled
1. The property should consist of any buildings and
lands appurtenant thereto
2. The assesse should be the owner
3. the property should not be used by the owner
for the purpose of any business or profession
carried on by him.
* ‘Building’ means ‘ enclosure of walls- with or without
roof’ - a residential house, commercial complex, office
building, godown, stadium, swimming pool, lecture halls,
convention centers etc…
* ‘Land appurtenant’ to the building – an indivisible part
of the building like pavement area, compound, garage,
garden area, corridors etc..

House Boat/house on wheels – not house property as

there is no land attached ..
Vacant land – not house property as there is no building
In the following cases, the income is not chargeable to
tax.
1. income farm house
2. property income of an approved scientific research
association.
3. property income of an educational institution or
hospital
4. house property held for charitable purpose
5.property income of an political party
6.property income of a local authority
7. annual value of any one palace of ex-ruler
Computation of taxable income depends on the nature of
occupation of the House property. Purpose for which
property is used by the assesse is the basis of charge
4 types of uses are :
*Let-out property – residential or commercial purpose
*Self occupied property
*Deemed to be let-out property
*Partly let-out partly self occupied
Let-out property…House property given on rent or lease.
The tenant may use for residential/commercial purpose.
Purpose for which the tenant is using, is irrelevant for tax
purpose.
The format for computing income from LOP
Gross Annual Value
- Municipal taxes
Net annual value
Less deductions u/s 24
a) Standard deduction
b) int on borrowed capital
Income from LOP
Gross Annual Value -
the annual value of a property shall be the sum at which
the property might reasonably be expected to be let out.
Following are required for calculating the GAV..

Municipal value
fair rental value
standard rent
actual rent
un-realised rent
vacancy period rent
Municipal value – value of the property as determined by municipal
authorities, for Computing municipal tax..
Fair rental value – rent of a similar accommodation in similar locality.
standard rent – rent according to rent control act, in India this Act is
applicable only in few cities.
actual / annual rent – rent charged to the tenant by the assesse for
one year
un-realised rent – refers to the rent not realised from the tenant –
when tenant has defaulted in spite of all measures taken by the
owner for rent recovery
Vacancy period rent – if the property is not let-out for full 12 months
in the PY, then there will be vacancy period. Rent for that period is
termed as Vacancy Period Rent
 CALULATION OF GROSS ANNUAL VALUE
STEP 1
Calculation of Notional Rent
Higher of Municipal Value & Fair Rental Value
restricted to Standard Rent
STEP 2
Calculation of Rent recovered
Annual rent – Unrealised Rent
STEP 3
Calculation of Gross Annual Value
Higher of Step 1 & 2 – Vacancy period Rent
 CALCULATION OF NOTIONAL RENT
1. Higher of Municipal Value & Fair Rental Value

2. Standard Rent

Notional Rent (Lower of the above 1 & 2)

Q 1: Calculate House A House B House C
Notional rent from Municipal Value 200000 200000 200000
the following Fair Rental value 196000 204000 204000
information. Standard Rent 192000 NA 208000

Ans 1: A B C
Higher of Municipal value & Fair 2,00,000 2,04,000 2,04,000
rental value
Standard rent 1,92,000 NA 2,08,000
Notional rent (least of the above two) 1,92,000 2,04,000 2,04,000
 2. Compute the Gross annual value from the
following information.

A B C D
Municipal Value 500000 450000 500000 400000
Fair Rent 480000 480000 540000 420000
Standard Rent 540000 420000 480000 450000
Annual rent 480000 360000 450000 480000
 A B C D
Higher of MV and FRV 5,00,000 4,80,000 540000 420000

Standard Rent 5,40,000 420000 480000 450000

Step 1. Notional rent 5,00,000 420,000 4,80000 420,000
Notional rent least of 1 & 2
Step 2. Rent recovered 4,80,000 3,60,000 4,50,000 4,80,000
Annual rent – un-realised
Step 3. GAV = 5,00,000 4,20,000 4,80,000 4,80,000
Higher of step 1 and 2 -
vacancy period rent
 3. Compute the Gross Annual value from the following information
A B C D
Municipal Value 800000 1400000 1000000 750000
Fair Rent 960000 1200000 960000 840000
Standard Rent 900000 1800000 1200000 720000
Annual rent 900000 1620000 1200000 660000
Unrealised rent 75000 100000 100000 60000
Vacancy period 2 months 1 month 3 months 1 month

Annual rent/12 = monthly rent

Monthly rent x vacancy pd = vacancy pd rent

a) Higher of MV and FRV
b) Standard Rent
Step 1.
Notional rent least of a & b
Step 2. Rent recovered
Annual rent – un-realised
Step 3. Higher of step 1 & 2
– vacancy period rent
(Annual rent/12 X vac pd)
Gross Annual Value
A B C D
9,60,000 14,00,000 10,00,000 8,40,000
9,00,000 18,00,000 12,00,000 7,20,000
9,00,000 14,00,000 10,00,000 7,20,000
8,25,000 15,20,000 11,00,000 6,00,000
9,00,000 15,20,000 11,00,000 7,20,000
(150,000) (135,000) (300,000) (55,000)
7,50,000 13,85,000 8,00,000 6,65,000
Municipal taxes- tax levied by the local authorities on the
house property. It is levied as a percentage on municipal
value. Other names for this tax are- water cess, sewerage
maintenance cess, sweeper cess.. Tax is deducted from
GAV to arrive at Net Annual Value

Tax can be deducted from GAV, only when the following

conditions are fulfilled
1. it must be paid
2. paid in the relevant PY
3. paid by the owner
 Compute the Net Annual value from the following information
Municipal Value 120000
Fair Rent 130000
Standard Rent 110000
Annual rent, If property is let out through out the year 126000
Unrealised rent 10500
Vacancy period 1 month
Municipal tax paid by the owner in PY 17000
Municipal tax of PY paid in April 2022 1000
Municipal tax paid by the tenant in PY 6000
a)Higher of MV and FRV 1,30,000
b)Standard Rent 1,10,000
Step 1. 1,10,000
Notional rent - least of a) & b)
Step 2. Rent recovered 1,15,500
Annual rent – un-realised 1,26,000 - 10,500
Step 3. Higher of step 1 & 2 – vacancy period rent 1,15,500
(10,500)
126,000/12 x 1 Gross Annual Value 1,05,000
Monthly=10,500
- municipal tax (17,000)
Net annual Value 88,000
Deductions u/s 24
from Net annual Value, deductions u/s 24 are made to
arrive at Income from Let-out Property. The two
deductions are:
1. standard deduction - this is for the expenses incurred
by the owner on the property. Insurance, repairs,
maintenance, rent collection charges, tax levied by other
authorities.. –
Standard deduction - 30% of NAV is deducted
irrespective of whether these exp are incurred or not. If
NAV is negative then Standard Deduction will be NIL.
Interest on borrowed capital
Under this clause, deduction is available for
interest on loan borrowed by the assesse for
property purpose. When the assesse has
borrowed any loan for purchase, construction
alteration, modification, major repairs, then
the interest on such loan is deductible u/s 24.
 Compute the income from house property from
the following particulars.
Fair Rent 80000
Standard Rent 60000
Municipal Value 50000
Actual rent 72000
Municipal tax 20%
Interest paid 18000

Note: 1. Municipal tax is computed on Municipal value. It is assumed

that the municipal tax is paid by the owner in the PY
2. Interest paid is assumed to be on the loan taken for House property.
a) Higher of MV and FRV 80,000
b) Standard Rent 60,000
Step 1.Notional rent least of a & b 60,000
Step 2. Rent recovered = Annual rent – un-realised 72,000
Step 3. Higher of 1 & 2 – vac pd rent Gross Annual Value 72,000
- municipal tax (10,000)
Net annual Value 62,000
deductions u/s 24:
Standard deduction 30% of NAV 18,600 -36,600
interest on capital 18,000
Income from let-out property 25,400
 Compute income from house property from
the following information
Actual rent 90,000
Municipal tax paid by the owner during the PY:
Tax of 21-22 30,000
Tax of earlier years 70,000

Repair expenses 6,000

Interest paid on loan for the purchase of property 25,000
Interest paid on loan taken for son’s education
pledging this house property 10,000
 Step 1 - Notional Rent 0
Step 2 - Rent recovered 90,000
Step 3 – GAV 90,000
Gross Annual Value 90,000
- municipal tax 1,00,000
Net annual Value -10,000
- deductions u/s 24
a) Standard deduction 30% of NAV ----
b) interest on capital 25,000 -25,000
Loss from let-out property - 35,000
Note: 1. municipal tax can be deducted as long as it is paid in the PY irrespective of the
year to which the tax belongs.
2. repair exp can not be deducted as std deduction is already given.
3. Int on educational loan can not be deducted as the loan is not for property purpose
 A B C
Fair Rent 18000 15000 12000
Municipal Value 15000 20000 10000
Rent per month 2000 1500 1250
Nature of usage by tenant Residential office Residential
Repair exp 1000 - 4000
Collection charges 2000 500 -
Interest on loan:
• For construction 10000 - -
• For daughter’s marriage - 6000 -
• For major repair - - 1000
Municipal tax is 10%. Tax for house A is paid by the owner on
25th March 2022. but for house B it was paid in April 2022. Tax
for house C was paid by the tenant. House C was Vacant for 4
months during the PY. Compute the income from LOP
A B C
a)Higher of Municipal value & FRV 18,000 20,000 12,000
b)Standard rent -- -- --
Step 1.Notional rent (least of the above two) 18,000 20,000 12,000
Step 2 actual rent 24,000 18,000 15,000
Step 3 higher of step 1 & 2 – vacancy 24,000 20,000 15,000
period rent = GAV -- --- - 5,000
 Gross Annual Value 24,000 20,000 10,000
- Municipal taxes 1,500 -- --
Net annual value 22,500 20,000 10,000
Less deductions u/s 24
a) Standard deduction – 30% NAV -6,750 -6,000 -3,000
b) int on borrowed capital -10,000 Nil -1,000
Income from LOP 5,750 14,000 6,000
Taxable income from HP = 5,750+14,000+6,000 = 25,750

Note: 1. repair exp and collection charges can not be deducted as std
deduction is already given.
2. Int on loan taken for daughter’s marriage can not be deducted as the
loan is not for property purpose.
3. Tax is levied on municipal value
4. Tax can be deducted only when it is paid by the owner in the PY
Composite rent:
When the owner has let out the property with
various other facilities like garden, swimming pool,
free supply of water electricity, lift facility etc, then
the rent charged is called as composite rent.
Such a rent includes the basic House rent as well
as charges for the extra facilities provided.
Kiran is the owner of a house property. Its municipal
valuation is 6,00,000. It has been let out for 9,00,000 pa.
The local taxes payable by the owner amounts to
1,00,000 but as per the rental agreement the tenant has
paid this directly to municipality. The landlord however
incurs the following expenditure on amenities.
Water charges 10,000
lift maintenance 10,000
salary of the gardener12,000
lighting of staircase 8,000
maintenance of swimming pool 5,000
water connection expenses 20,000
landlord has also paid 3,00,000 towards repairs, 10,000 as
land revenue and 20,000 as collection charges. Compute
the income from House property.
Gross Annual Value - working 1 8,55,000
- municipal tax - note Nil
Net annual Value 8,55,000
- deductions u/s 24
a) Standard deduction 30% of NAV 2,56,500 (2,56,500)
b) interest on borrowed capital Nil
Income from let-out property 5,98,500
Step 1 Notional rent –only MV is given.. 6,00,000
Step 2. Rent recovered 8,55,000
rent charged 9,00,000
less:
Water charges 10,000
Lift 10,000
Gardener salary 12,000
Lighting 8,000
Swimming pool 5,000
Water connection --- 45,000
Step 3 – GAV = higher of 1 & 2 – vacancy pd 8,55,000
Note:
1. Composite rent is inclusive of other amenities along
with rent. As these facilities have separate exp, these are
removed to arrive at the actual rent.
2. Water connection exp is a basic facility and does not
amount to amenities.
3. tax paid can not be deducted from GAV as it is paid by
the tenant.
4. Standard deduction is collectively provided for exp
incurred in connection with HP. Hence repairs, collection
charges, land revenue paid etc can not qualify for
deductions
Interest on borrowed capital:
Amount of interest deductible u/s 24 is calculated
as below:
Previous year’s interest
+ 1/5th of ‘pre-completion period interest’
previous year interest is the interest on loan
outstanding for the relevant PY
pre-completion pd interest is the int for the ‘Pre-
completion period’
Pre-completion period refers to the period commencing
from the date of borrowing the loan and ending on the
earlier of 31st march preceding the date of completion
of construction, or the date on which the loan has been
completely repaid. The interest on pre-completion
period is deducted equally over a period of 5
consecutive years commencing from the PY in which
the construction of property was completed.
Steps for ascertaining the ‘pre-completion period’
1. ascertain the date of borrowing of loan
2. identify the 31st march preceding the date of completion.
3. Ascertain the date of loan repayment
4. consider the earlier of 2nd step & 3rd
5. Duration between the 1st step and the 4th step is the ‘Pre-
completion period’

loan repayment date

date of loan or which ever
31-3 preceding date is earlier
of completion
Mr. X borrows Rs. 80,000 at 15% pa on 1st Aug 2016
for construction of the house property and the
construction was completed on 31st Aug 2018 and
loan is to be repaid by 31st March 2022. determine
the pre-construction interest.

Pre-construction period = starts with the date of

borrowing the loan and ends on date of repayment
of loan or 31st march immediately preceding the
date of completion
 31-3-2022
1-8-2016 or W E is Earlier
31-3-2018

Pre-completion period =
1-8-2016 to 31-3-2018 = 20 months
Int on pre-completion period =
80,000 x 15/100 x 20/12 = 20,000
Spread over 5 years = 20,000/5 = 4,000
PY - 18-19, 19-20, 20-21, 21-22, 22-23….
in the previous year 21-22 = int is 80,000x15% = 12,000
Add: 1/5th pre-completion interest 4,000
Total deduction u/s 24 of interest on loan 16,000
Mr. Narayan started the construction of his
house on 7-6-2017 and took housing loan of
6,00,000 at 12% on 1-7-2019. The
construction of house was completed on 30-6-
2021 and was let out from 1-7-2021 on a
monthly rent of 7,500/-. Calculate the amount
of interest that can be claimed as deduction
u/s 24 assuming that the entire amount of
loan is outstanding during PY 21-22
 ----
1-7-2019 or W E Earlier
31-3-2021
Pre-completion period 1-7-2019 31-3-2021
Int on pre-completion period = 9 + 12 = 21 months
6,00,000 x 12/100 x 21/12 = 1,26,000
Spread over 5 years = 1,26,000/5 = 25,200
PY, 21-22, 22-23, 23-24, 24-25, 25-26……
in the previous year 21-22
int is 6,00,000x12% = 72,000
Add: 1/5th pre-completion interest 25,200
Total deduction of interest on loan 97,200
R takes a loan of 40,000 @15% pa on 10th June
2016 for construction of a house. The construction
was completed on 20th Jan 2022. Compute the
interest on loan deductible u/s 24 if the date of
loan repayment is:

a) 16th Jan 2026

b) 31st Oct 2019
 16-1-2026
10-6-2016 or W E Earlier
31 -3-2021
Pre-completion period 10-6-2016 31-3-2021
Int on pre-completion period =
40,000 @ 15% from 10-6-2016 to 31-3 2021 = 28,849
Spread over 5 years = 28,849/5 = 5,770
PY,, 21-22, 22-23….
in the previous year 20-21 = int is 40,000x15% =6,000
Add: 1/5th pre-completion interest 5,770
Total deduction of interest on loan 11,770
 31-10-2019
10-6-2016 or W E Earlier
31 -3-2020

Pre-completion period 10-6-2016 31-10-2019

Int on pre-completion period = 20351
40,000 @ 15% from 10-6 2014 to 31-10-2017= 20351
Spread over 5 years = 20351 /5 = 4,070
PY 21-22, 22-23, 23-24….
in the previous year 21-22 = 0
Add: 1/5th of pre-completion interest 4,070
Total deduction of interest on loan 4,070
S is the owner of a house property, construction of
which was completed on 11-9-2017. The property
has 4 units- 3 residential and one commercial. The
MV of the property is 2,50,000 and rent for a similar
accommodation in the same locality is 21,000 pm.
However, the standard rent is 20,500 pm for the
entire property. Each residential unit has been let
out for a rent of 5000 pm, while the commercial
unit is let out at 6,000 pm.
During March 2022, the entire property was vacant
and there was 2 months unrealised rent from the
commercial unit and 6 months unrealised rent from
one of the residential unit. All conditions for
deduction of unrealised rent have been satisfied.
Municipal authorities levied 10% tax on the
property, 60% of which paid by S and rest by the
tenants. Assesse incurred repair expense of 40,000
during 21-22 and rent collection charge of 500/-
further he paid land revenue of 6,000/-
He has taken a loan of 2,00,000 at 10% pa on 1-4-2015
for the construction of the property. The loan was repaid
on 31-10-2021. compute the income from house
property for the AY 22-23.
Gross Annual Value - working 1 2,25,000
- municipal tax-2,50,000x10%x60% 15,000
Net annual Value 2,10,000
- deductions u/s 24
a) Standard deduction 30% of NAV 63,000
b) interest on borrowed capital- working 2 19,667 82,667
Income from let-out property 1,27,333
 Rs.
Higher of Municipal value 2,50,000 2,52,000
FRV=21,000x12 = 2,52,000
Standard rent = 20,500x12 = 2,46,000 2,46,000
Step 1.Notional rent (least of the above two) 2,46,000
Step 2. rent recovered
Annual rent (5000x12x3)+(6000x12)= 2,52,000
- Unrealised rent (5000x6) + (6000x2) = -42,000 2,10,000
Step 3. higher of step 1 & 2 = 2,46,000
-Vacancy pd (5000x3) + 6000 = -21,000
Gross Annual Value 2,25,000
 repayment 31-10-2021
1-4-2015 or W E Earlier
31 -3-2017
Pre-completion period 1-4-2015 31-3-2017
Int on pre-completion period = 2 years
2,00,000 @ 10% for 2 years = 40,000
Spread over 5 years = 40,000 /5 = 8,000
PY, 17-18, 18-19, 19-20, 20-21, 21-22…

Int on loan in PY 21-22- 2,00,000x10% x7/12 11,667

Add: 1/5th of pre-completion interest 8,000
Total deduction of interest on loan 19,667
SELF-OCCUPIED PROPERTY
when the owner/assesse uses the property for his
residential occupation it is termed as self occupied
property. The property could be used by him, his parents,
his children or the HUF where he is a member. Any
property kept vacant by the assesse for the entire period
of PY is also regarded as SOP.
Since the assesse does not get any monetary benefit form
the House property, the Annual Value for SOP is taken to
be ‘Nil’ and the annual value refers to the value after
deduction for payment of Municipal taxes.
 Format for computing income from SOP
Annual Value Nil
- deductions u/s 24
b) interest on borrowed capital
Income from Self occupied property

Deduction u/s 24 is computed as below

Interest as per format
Or which ever is less
Maximum limit
Interest as per format:
previous year interest xxxx
th
+ 1/5 of pre-completion Int xxxx

Maximum limit:
Rs. 2,00,000 when all conditions are fulfilled
30,000 if conditions are not fulfilled.
3 conditions to be fulfilled for 2,00,000 Max limit
1. loan should have been borrowed on or after 1-4-1999.
2. purpose of loan is for purchase/construction.. Not for
repairs/renewals/alterations…This loan also could be
taken for the repayment of earlier loan.
3. purchase/construction should be completed within 5
years from the last date of the financial year during
which the loan was borrowed. Eg..Loan taken in july
2017. financial year 17-18 ends on 31-3-2018. The
construction should be complete with in 5 years from 31-
3-2018 that is by 31-3-2023.
X borrowed loan on 1-8-1998 for purchase of house 30,000
property
X borrowed loan 1-6-2015 for purchase of house property 2,00,000
X borrowed loan in 2012 for repairs 30,000
X borrowed loan on 1-7-2011 for repayment of earlier 2,00,000
loan taken in may 1997 for construction
X borrowed loan in June 2013 for construction which was 2,00,000
complete during 2015
X borrowed loan in Aug 2012 and construction was 30,000
complete in May 2018… Aug 2012 is financial year 12-13
ending on 31-3 2013.. 5years from 31-3-2013 is 31-3-2018.
construction was complete in May 2018,, Hence only 30k
Yoganand has a house property in Mumbai used for
self occupation. Fair rent is 6,00,000 where as
Municipal value is 5,00,000. Municipal taxes paid
during the previous year is 48,000. This house was
constructed in 1998 with a loan of 12,00,000.
During PY 21-22 he Re-paid 4,26,000 out of which
1,39,000 was the interest component. Compute
taxable income from House property for AY 22-23.
If the loan was taken in June 2011 and construction
was completed in May 2014, what is the income
from HP?
Situation 1 – loan taken in 1998 hence the max
amount can be only 30,000

situation 2 – loan taken in June 2011 and

construction completed in May 2014

Year 11-12 ends on 31-3 12 and the construction is

competed with in 5 years. Hence max amount can
be 2,00,000
 Situation 1 Situation 2
Annual Value Nil Nil
- deductions u/s 24(b)
interest on borrowed capital- working 1 30,000 1,39,000
Income from Self occupied property - 30,000 - 1,39,000

Working 1 Situation 1 Situation 2

Interest as per format 1,39,000 1,39,000
or which ever is or or
Maximum limit less 30,000 2,00,000
30,000 1,39,000
 repayment ….
1998 or W E Earlier
1998
Pre-completion period 1998 1998
Int on pre-completion period =

PY 98-99, 99-2000, 00-01, 01-02, 02-03

Int on loan in PY 21 -22 1,39,000

Add: 1/5th of pre-completion interest 0
Total deduction of interest on loan 1,39,000
 repayment ….
6-2009 or W E Earlier
31-3-2012
Pre-completion period 6-2009 31-3-2012
Int on pre-completion period =

PY 12-13,13-14, 14-15, 15-16, 16-17

Int on loan in PY 20-21 1,39,000

Add: 1/5th of pre-completion interest 0
Total deduction of interest on loan 1,39,000
DEEMED TO BE LET OUT PROPERTY – DLOP
when an assesse has occupied his properties for own
residential purpose then the tax treatment will be as
below-
* 1 property is used for self occupation-it is treated as SOP
* when 2 properties are used for self occupation then
both the properties are taken as SOP
* If more than 2 properties are used for own residential
purpose, then only two houses are treated as self-
occupied and other house/houses will be treated as
‘deemed to be let-out’. The choice of SOP is left to be
option of the taxpayer.
 CALULATION OF GROSS ANNUAL VALUE
STEP 1
Calculation of Notional Rent
Higher of Municipal Value & Fair Rental Value
restricted to Standard Rent
STEP 2 Calculation of Rent recovered
Annual rent – Unrealised Rent XXXXX
STEP 3 Calculation of Gross Annual Value XXXXX
Higher of Step 1 & 2 – Vacancy period Rent
GAV will be the notional rent itself
Mr. X owns 3 houses all of which are used for his residential
purpose. Compute the income from house property for Ay 22-23
House A House B House C
Municipal valuation 30,000 70,000 92,000
Fair Rent 40,000 58,000 96,000
Standard Rent 37,000 74,000 NA
Municipal Tax paid by X 3,000 16,000 29,000
Insurance premium 1,000 2,000 11,700
Interest Capital borrowed for
construction inclusive of 1/5th of 11,060 75,900 54,090
pre-completion pd interest.
Interest on capital borrowed to 600 400 --
pay municipal tax
For House C the loan was borrowed on April 10 2009
where as for house A and B the loan was taken in 1997.

Option 1 - A & B are SOP………………….. C is LOP

Option 2 - A & C are SOP……………………B is LOP
Option 3 - B & C are SOP …………………..A is LOP
House A House B House C
Interest as per format 11,060 75,900 54,090
or Maximum limit 30,000 30,000 2,00,000
Which ever is less will be the
interest deductible u/s 24b for SOP 11,060 30,000 54,090
 House A House B House C
Self occupied property
Annual value Nil Nil Nil
-int on loan u/s 24(b) working 1 -11,060 -30,000 -54,090
Income/loss from SOP -11,060 -30,000 -54,090
Deemed to be let out
GAV being Notional rent 37,000 70,000 96,000
- municipal tax (3,000) (16,000) (29,000)
Net Annual value 34,000 54,000 67,000
Dedn u/s 24
a)Std deduction-30%of NAV -10,200 -16,200 -20,100
b)Interest on borrowed capital -11,060 -75,900 -54,090
Income from LOP 12,740 -38,100 -7,190
 Option 1 Option 2 Option 3
Income from A & B SOP A & C SOP B & C SOP
C is DLOP B is DLOP A is DLOP
House A -11,060 -11,060 12,740
House B -30,000 -38,100 -30,000
House C -7,190 -54,090 -54,090
Income from House property -48,250 -1,03,250 -71,350

Since the loss from option 2 is the highest, it is suggested

that the assesse will take option 2 that is consider House A
and C to be self occupied and take B as let out property.
Let the salary income be 2,00,000
income from house property -1,03,250
taxable income 96,750

in case of positive income, option with the lowest income is

preferable. Eg.. Option 1. 10,000 option 2 is 45,000, option 3 is 72,000

Let the salary income be 2,00,000

income from house property 10,000
taxable income 2,10,000
PARTLY SELF OCCUPIED AND PARTLY LET OUT
this can be 2 types
1. one portion is SOP and other portion is LOP
2. one part of the year SOP and rest of the period LOP

For LOP: Municipal tax and interest on borrowed capital

should be proportionate value for the LOP
Rs.
Income from LOP as per format xxxxx
Income from SOP as per format xxxxx
Income from House property.
X owns one residential house I Mumbai with 2 units of
equal size.. Unit 1 is self occupied by X where as unit 2 is
let out for 16,000 pm. The rented unit was vacant for 2
months during the PY. The particulars of this house is as
below:
Standard Rent 1,62,000 pa, Municipal Valuation 1,90,000
Fair rent 1,85,000, Municipal tax 15%, Apart from basic
rent of 16,000, light and water charges 500 pm. Interest on
loan 8,000 pm, Ground Rent 1,200 pa, Insurance charges
3,000 pa, repairs 12,000 pa.
Compute the income from House property of X for The AY
22-23
Working 1 - SOP Rs.
Annual value Nil
Less: int on loan u/s 24 b
Int as per format 8,000x 50%x12 48,000
Or Max limit 2,00,000 (48,000)
assuming all conditions are fulfilled
Which ever is less
Income from self occupied House property. - 48,000

Rs.
Unit 1- Income from SOP as per format- working 1 -48,000
Unit 2 -Income from LOP as per format – working 2 54,025
total Income from House property. 6,025
Working 2 -LOP Rs.
Notional rent 1,62,000 / 2 81,000
Rent recovered 1,92,000
1,92,000-32,000 = Gross Annual Value 1,60,000
- Municipal tax- 15% x MV x 50% (14,250)
Net Annual Value 1,45,750
Less deduction u/s 24
a) Standard deduction 30% of NAV 43,725
b) Int on loan 8000x12x50% 48,000 (91,725)
Income from Let-out property 54,025
Note: 1. light charges, repairs, insurance and ground rent are not to be considered.
2. Municipal taxes and interest on loan is apportioned between SOP & LOP in 1:1
3. Notional rent proportionate to LOP is taken..
4. Maximum limit on interest on loan is available only for SOP
Ram owns a property in Chennai which was occupied
by him for his residential purpose. He was transferred
to Mumbai and hence he let-out the property from 1st
June 2021 on a monthly rent of 30,000. The fair rental
value of the property is 2,40,000 and Municipal
valuation is 2,50,000.
corporation tax payable is 35,000 of which 50% is paid
by him in the PY. Interest on money borrowed for
construction of the property amounted to 1,20,000.
compute the income from HP for AY 22-23
This House is for a part of the PY self occupied and for
other part of the year let-out.

Income from such property is computed as though it is a

let out property. How ever while computing income from
such property the actual rent for the period let out must
be taken and not for the whole PY. Other provisions and
deductions remain same as in case of LOP
It is partly SOP and partly LOP as the property is self occupied
for 2 months and later let –out.. Income from such property is
computed as though it is a let out property
Rs.
1. Notional rent 2,50,000
2. Rent recovered 3,00,000 - 0 3,00,000
3,00,000 - vacancy Gross Annual Value 3,00,000
- Municipal tax (17,500)
Net Annual Value 2,82,500
Less deduction u/s 24
a) Standard deduction 30% of NAV 84,750
b) Int on loan 1,20,000 (2,04,750)
Income from Let-out property 77,750
S owns a property in Delhi which was let out on monthly
rent of 14,000 pm till 31-Jan 2021 after which S used it
for self occupation. Municipal value is 1,64,000, fair rent
is 2,16,000 and standard rent is 1,80,000. S paid Rs.
6,000 as municipal tax during the PY and also spent
2000 on Repairs and 4,500 on insurance of property.
Interest on borrowed capital for construction of
property amounted to 1,23,000 and the loan was taken
in 1995. compute income from house property for the
AY 22-23.
 Rs.
Notional rent 1,80,000
Rent recovered – 10 x 14,000 1,40,000
Gross Annual Value 1,80,000
- Municipal tax 6000
Net Annual Value 1,74,000
Less deduction u/s 24
a) Standard deduction 30% of NAV 52,200
b) Int on loan 1,23,000 (1,75,200)
Loss/Income from Let-out property -1,200
Note: 1. consider the number of months let out for rent
recovered purpose
2. max limit is not applicable for LOP
Mr. X owns 3 houses all of which are used for his residential
purpose. Compute the income from house property for Ay 22-23
House 1 House 2 House 3
Municipal valuation 10,000 30,000 30,000
Fair Rent 18,000 18,000 45,000
Standard Rent 15,000 20,000 40,000
Municipal Tax paid by X 1,200 2,400 3,600
Insurance premium 1,200 900 500
Repairs 1,800 -- --
Mr. X Borrowed loan of 30,000 at 12% on 1-6-2017 for
construction of HP 3 which was complete on 10-5-2021. Entire
loan amount was paid on 31-1-2021.
 Int to be deducted =
Option 1 - 1 & 2 are SOP………………….. 3 is LOP Int in PY 0
Option 2 - 1 & 3 are SOP……………………2 is LOP + 1/5th of pre com int 2640
Option 3 - 2 & 3 are SOP …………………..1 is LOP Pre-completion period=
1-6-2017……….31-1-2021 = 44 months
31-1-2021
30,000 x 12% x44/12 = 13,200
loan 1-6-2017 or W E is earlier 13,200 / 5 = 2,640
31-3-2021 PY 21-22, 22-23, 23-24, 24-25, 25-26
PY 21-22 interest = 0 as the loan is repaid
+ 1/5th pre-com-int 2,640

Working 1 House 3
Interest as per format 2,640
or Maximum limit- construction-taken after 1999 2,00,000
Completion with in 5 years
Which ever is less will be the interest deductible 2,640
u/s 24b for SOP
 House 1 House 2 House 3
Self occupied property
Annual value Nil Nil Nil
-int on loan u/s 24(b) working 1 Nil Nil 2,640
Income from SOP nil Nil -2640
Deemed to be let out
GAV being Notional rent 15,000 20,000 40,000
- municipal tax 1,200 2,400 3,600
Net Annual value 13,800 17,600 36,400
Dedn u/s 24
a)Std deduction 4,140 5,280 10,920
b)Interest on borrowed capital -- -- 2,640
Income from LOP 9,660 12,320 22,840
 Option 1 Option 2 Option 3
Income from 1 & 2 SOP 1 & 3 SOP 2 & 3 SOP
3 is DLOP 2 is DLOP 1 is DLOP
House 1 0 0 0
House 2 0 -2640 -2,640
House 3 22,840 12.320 9660
Income from House property 22,840 9680 7020

Since the income from option 3 is the lowest, it is

suggested that the assesse will take option 3 that is
consider House 2 and 3 to be self occupied and take 1 as
let out property.