Taxation of Income from House Property

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


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.


[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


I have two questions:

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”?


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.

Recently my father expired who was Single holder, Self owned of 3 flats. 2 in Vasai and 1 in small village called chendre. All these flat are in Co-Op Housing Society. My father died without any will or nomination, hence we ( Me and my Mother ) had to apply for legal heirship certificate from the Vasai court. I have no siblings and my grand mother has given NOC. This certificate is given under Bombay Regulation Act VIII of 1827. This certificate grants us the legal management of the above flats and declare us the legal heir for this property of my father. Me and my mother have equal rights for this property as per Hindu Succession Act. In present too my fathers named is registered in registrar office as per the agreement of above flats. Share certificate has been transferred in our both name and property mutation for property tax there too name has been changed in our both name.

My question is as follows:

  1. Under “Owner of the property” do we have to select as Self or select OTHER (Mentioning the owner of property is my demised father) ?

  2. Under Section “Is property Co-owned” do we have to select Yes and 50-50 percent even though in the agreement my or my mother name is not present.

  3. Can we show 2 flats as self occupied by my mother and 1 flat as self occupied by me under the “Type of House Property” as i live in vasai and my mother prefer to live in chendre ( country side )

Please Help

Hi @nitinjain105

Here are answers to your various questions

  1. You are required to select “self” under “Owner of the property” as the share certificate has been transferred.
  2. You are required to select “yes” under “Is property Co-owned” as 50-50% as in the share certificate the name has been updated.
  3. No, you cannot show 2 properties as self-occupied, as both of you are the joint owners of the properties and hence according to the law, the other property/properties is/are deemed to be let out.

Here’s a read on Income from House Property and Taxes - Guide - Learn by Quicko for your reference.
Hope this helps.

Ma’am Please clarify the 3rd Point of your reply.

I understand that we cannot show 2 flats as self-occupied under my mother’s ITR and 1 flat as self-occupied under my ITR as you mentioned it is jointly held.

But can we both show in our respective ITR as - 2 properties as self occupied and 1 property as deemed let out ? as the provision for self occupied property was raised recently from 1 to 2 properties…

Hi @nitinjain105

Yes. You are right.
For the FY 2019-20 and onwards, the benefit of considering the houses as self-occupied has been extended to 2 houses. Now, a homeowner can claim his 2 properties as self-occupied and the remaining house as let out for Income tax purposes.

if someone is retired and want to sell their house and want to buy other house.

do they have to file ITR if they do not have any other income ?

Hi @Private

Union Finance Bill 2021 came up with the introduction of a new section 194P. It provides conditions for exempting from filing Income Tax returns to senior citizens aged 75 years and above. New Section 194P is applicable from 1st April 2021 . Here’s a read on Section 194P for your reference.

However, in case of selling & buying any house property, if there are any capital gains, then it can be exempted if you invest in NHAI or REC Bonds. The amount of exemption will be lower of:

  1. Cost of NHAI or REC Bonds
  2. Capital Gain on sale of land or building or both

age is under 60.

want to sell current house and buy new house in same financial year. so there will be no capital gains. right?

do they have to file ITR? because there is no income arise from this and he is retire so there is no any other source of income.

Hi @Private

The Income-tax Act, 1961 provides no exemption to senior citizen or very senior citizen from filing of return of income. However, to provide relief to senior citizens (whose age is 75 years or more) and to reduce the compliance burden on them, the Finance Act, 2021, has inserted a new section 194P.

Capital gain/loss is the difference between the purchase price and the selling price of the asset.
If the ITR has been filed, and capital loss, if any, is reported, it can be carried forward and set off in future years.
If there is a capital gain, then it can be exempted if the gain is invested in NHAI or REC Bonds. If not invested, then it shall be taxable at the applicable tax rate. Here’s a read on Capital Gain Tax on Sale of Property/Land - Learn by Quicko.

I am talking about

" * Section 54F – Exemption on sale of residential house property on investment in another residential house property."

if someone sell residential house and invest in another residential house. do they have to file ITR if there no other income?

Hi @Private

For sale of property without any capital gain, no ITR is required. You can claim any losses/exemption under section 54F and carry forward & set off to the next financial year by filing an Income Tax Return.

What is the formula to calculate NAV of rented property for income tax purposes?

Hey Urja,

If a House Property is given on rent for the whole year or a part of the year then it is considered as Let Out House Property.

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

For calculation of let out property, Gross Annual Value (GAV) is the amount of rent received during the year.

For example:

Anuj rented property with an annual rent of INR 2,00,000. Anuj paid INR 15,000 for municipal taxes the financial year.

NAV = 2,00,000 - 15,000

NAV = 1,85,000

Here is a guide on Income from House Property to help you understand better.

Hope this helps :slight_smile:

I own 2 house properties, 1 is used by my children and wife and the other is empty. Do I have to pay tax for the empty house property also - because I am not receiving any rent on the 2nd property?

Hey Yash,

Yes, you need to have pay tax on the notional income for the vacant house property. Meaning, on the rent income you would if it were rented, and it will be treated as deemed let out house property.

You can check out the computation of Income on Deemed Let-Out house property article on our learn center.

I have sold multiple immovable properties which together add up to INR 30,00,000. Do I still need to report my income from immovable properties or since each one of them is less than 30,00,000 individually I can refrain from reporting it?

Hi @Vasu_Jain,

It is always a good practice to file your ITR and report all your financial transactions to avoid notice from the Income Tax Department. Especially after the SEBI and CBDT’s data partnership. If your total income is below the basic exemption limit, you won’t have any tax liability.

Also, high-value transactions are reflected in your Form 26AS.
Here’s how you can track your High-Value Transactions

Hope this helps :slight_smile: