Self-occupied v/s Let out house property

What is the difference between self-occupied and let out house property?

Hey @AARTI_THAKKAR

House property for income tax purpose include:

  • Any building: residential housed, flats, shops, office spaces, factory shed, godowns, workshop building, farmhouses, etc.
    • Land attached to that building. It includes compound, courtyard, parking which is a part of the building

Self-Occupied house property is the property which you use for your own residence. A property can be claimed as self-occupied if it is used by your spouse, children and/or parents.

If a property is given on rent for a year or part of a year, then it is considered as a let out house property.

If a person has more than 1 house property during the financial year, and none of them is given on rent, he/she can claim only one property as self-occupied for Assessment Year 2019–20(FY 2018–19). The other house property will be assumed to be let out for income tax purpose and is called deemed let out. In case of deemed let out rental income is assumed for income tax purpose.

Taxable income from house property will be taxed at slab rate. [1]

  • Gross Annual Value is the annual rental income from the house property
  • The standard deduction of 30% of NAV is allowed to let out house property.
  • The interest you pay as a part of the home loan is deducted from NAV while calculating your taxable income from house property.

Net Annual Value (NAV) = Gross Annual Value – Municipal Taxes

Taxable Income = NAV – (NAV * Standard Deduction) – Interest[2]

Hope this helps! In case of any query feel free to message us or leave a comment below.

Footnotes

[1] ITR for Multiple House Properties - Plan | Quicko

[2] Guide: Income from House Property and Taxes | Income Tax, GST ,TDS, Incorporation & ROC Compliance | Help Center | Quicko

Hi,

I have two questions:
1.

Of course, you have the option to select which property you want to take as Self Occupied.

Does this mean that I can mark my Self occupied home as let out & let out property as self occupied? Can you please mention the section details of this provision?

  1. In case the above is fine, what about the rent from the let out property (which has been marked as self occupied)? Will it still be considered under “Income from house”?

Thanks

Hi @mithun

If you own more than one Self Occupied property, then only two of them will be taken as Self Occupied. The remaining House Properties will be Deemed Let Out. You have to calculate rent based on fair market value and tax is levied on the same even if you are not earning any rent in actuality.

So yes you have the option to choose which one you want to consider as deemed let out property from self-occupied or vacant house properties you own. However, you cannot mark a self-occupied home as let out & let out property as self-occupied.