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ITR filing: All you need to know about treatment of income from self-occupied property

A house property is ‘self-occupied’ when the owner or family members use it for residential purpose. It could be termed ‘self-occupied’ even where the house was not occupied throughout the year due to owner’s employment at another place.

ET CONTRIBUTORS|
Updated: Dec 09, 2019, 10.43 AM IST
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House property includes any building and land appurtenant thereto which an individual owns.
A house owned by an income tax assessee, even if self-occupied or rented out, should be disclosed while filing income tax returns. Income from house property is a separate head of income which is eligible for deductions, depending on whether the house is selfoccupied or rented out. Treatment of income from self-occupied property as per income tax rules is discussed hereunder.

Self-occupied or rental house
A house property is ‘selfoccupied’ when the owner or his/her 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 owner’s employment at another place. Also, if a person owns a house but lives with parents, it may be termed as ‘selfoccupied’ if it was not rented out.

Annual value
In the income tax return, 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.

Deductions
Interest paid on loan taken for the self-occupied house is an eligible deduction under this head of income. The amount paid as interest on the loan can be entered here. The current maximum limit for self-occupied house is Rs 2 lakh. The form will allow a maximum of this amount to be entered, even if the actual interest paid is higher.

Carry forward/set off
Since the annual value of the self-occupied property is set to zero, the interest paid amount will appear as a negative amount which 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 assesssee has no other income, the loss can be carried forward.

Points to note
  • The term 'House property' includes any building and land appurtenant thereto which an individual owns.
  • If the property owned by the assessee is used for commercial purpose, it should not be included in the income from house property.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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