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How to show income from house property while filing ITR
December, 10th 2019

In the income tax return form, under the head ‘Income from House Property’ one needs to select the type of house property -- self-occupied or let out

Income Tax rules in India require assessees to disclose house property owned by them whether it is self-occupied or rented out. Income from house property is shown under a separate head of income and it is eligible for deductions, depending on whether the house is self-occupied or rented out. Here is how you need to show the income from self-occupied property as per income tax rules.

Your house property will be considered as ‘self-occupied’ if you or your family members use it for residential purpose. A house could be termed ‘self-occupied’ even in a situation where the house was not occupied throughout the year due to the owner’s employment at another place. Also, if a person owns a house but lives with parents, it may be termed as ‘self-occupied’ if it was not rented out.

How to show income from self-occupied property

In the income tax return form, under the head ‘Income from House Property’ one needs to select the type of house property -- self-occupied or let out. After selecting ‘self-occupied’ the annual value of the self-occupied house is taken as zero. Interest paid on home loan taken for a self-occupied house is eligible for deduction under section 24(b) of IT Act up to a limit of Rs 2 lakh. The amount paid as interest on the loan can be entered here. Even if the actual interest paid in a financial year is more than Rs 2 lakh, the form will allow a maximum of Rs 2 lakh to be entered.

Since the annual value of the self-occupied property is set to zero, the interest paid amount will appear as a negative amount and will be adjusted against other heads of income like salary or income from other sources. Hence, the gross income which is subject to tax will reduce to that extent. In a situation where the assessee has no other income, the loss can be carried forward.

Worth mentioning here is that the amount you pay every year towards repayment of principal qualifies for income tax deduction u/s 80C up to a limit of Rs 1.5 lakh. If the property owned by the assessee is used for commercial purpose then it is not shown under income from house property.

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