Income from house property is a common source of income for many taxpayers. For the Assessment Year (AY) 2024-25, understanding how to accurately report this income in your Income Tax Return (ITR) and leverage available exemptions and deductions can significantly impact your tax liability. This comprehensive guide covers the types of house property income, the tax implications, available exemptions and deductions, and the reporting process.

Income from House Property

Income from house property is primarily categorized into two types:

Self-Occupied Property: A property which is occupied by the owner for residential purposes.

Let-Out Property: A property that is rented out to tenants.

Tax Implications:

Self-Occupied Property: The annual value is considered nil, but interest on home loan can be claimed as a deduction.

Let-Out Property: The annual value (rental income) minus municipal taxes is considered as taxable income, with deductions for standard maintenance and interest on home loan.

Exemptions and Deductions

1. Standard Deduction:

Let-Out Property: A flat deduction of 30% of the Net Annual Value (NAV) for maintenance and repairs (Section 24(a)).

Self-Occupied Property: Not applicable.

2. Interest on Home Loan:

Self-Occupied Property: Deduction up to ₹2 lakh on interest paid on home loan (Section 24(b)).

Let-Out Property: Entire interest amount can be deducted without any limit.

3. Pre-Construction Interest:

Interest paid during the pre-construction period can be claimed in five equal installments starting from the year of completion.

4. Municipal Taxes:

Municipal taxes paid during the year are deductible from the Gross Annual Value (GAV) of the property.

Reporting Process

To correctly report your income from house property and claim exemptions and deductions in the ITR for AY 2024-25, follow these steps:

Step 1: Determine the Appropriate ITR Form

ITR-1 (Sahaj): For individuals with income from one house property (excluding cases where loss is brought forward from previous years).

ITR-2: For individuals and HUFs with income from more than one house property.

ITR-3: For individuals and HUFs having income from business or profession, including income from house property.

Step 2: Calculate Income from House Property

For Self-Occupied Property:

Annual Value: Considered nil.

Deductions: Interest on home loan up to ₹2 lakh.

For Let-Out Property:

Gross Annual Value (GAV): Total rent received or receivable in a year.

Net Annual Value (NAV): GAV - Municipal Taxes paid.

Deductions:

Standard Deduction: 30% of NAV.

Interest on Home Loan: Full interest amount.

Step 3: Fill in the Relevant Schedules in ITR

Schedule HP (Income from House Property):

Self-Occupied Property:

Annual Value: Nil

Interest on Home Loan: Deductible up to ₹2 lakh

Let-Out Property:

Gross Annual Value: Enter total rental income

Municipal Taxes: Deduct municipal taxes paid

Net Annual Value: Calculate NAV

Standard Deduction: 30% of NAV

Interest on Home Loan: Deduct full interest amount

Example: Reporting Income from House Property

Mr. Sharma owns two properties. One is self-occupied, and the other is let-out. Here are the details:

Self-Occupied Property:

Home Loan Interest: ₹1.8 lakh

Let-Out Property:

Annual Rent: ₹6 lakh

Municipal Taxes Paid: ₹50,000

Home Loan Interest: ₹2.5 lakh

Self-Occupied Property:

Annual Value: Nil

Deduction for Interest on Home Loan: ₹1.8 lakh

Let-Out Property:

Gross Annual Value: ₹6 lakh

Municipal Taxes: ₹50,000

Net Annual Value: ₹6 lakh - ₹50,000 = ₹5.5 lakh

Standard Deduction: 30% of ₹5.5 lakh = ₹1.65 lakh

Interest on Home Loan: ₹2.5 lakh

Total Deductions: ₹1.65 lakh + ₹2.5 lakh = ₹4.15 lakh

Taxable Income: ₹5.5 lakh - ₹4.15 lakh = ₹1.35 lakh

Mr. Sharma will report ₹1.35 lakh as income from house property in Schedule HP and claim ₹1.8 lakh for the self-occupied property.

Step 4: Verify and Submit ITR

Review all the information entered in the ITR.

Verify your ITR using Aadhaar OTP, Net Banking, or by sending a signed ITR-V to CPC, Bengaluru.

Tax-saving Tips

To minimize your tax liability on income from house property, consider the following strategies:

1. Optimize Home Loan Interest Deductions:

Ensure to claim the full interest on home loan for both self-occupied and let-out properties.

2. Utilize Standard Deduction:

Take advantage of the 30% standard deduction on the Net Annual Value of let-out properties.

3. Pay Municipal Taxes:

Pay municipal taxes within the financial year to claim the deduction.

4. Pre-Construction Interest:

Claim the pre-construction interest in five equal installments starting from the year of completion.

Case Study Examples

Example 1:

Ms. Rao owns a self-occupied house with the following details for FY 2023-24:

Home Loan Interest: ₹1.5 lakh

Tax Calculation:

Annual Value: Nil

Deduction for Interest on Home Loan: ₹1.5 lakh

She will report Nil income from house property and claim a ₹1.5 lakh deduction in Schedule HP.

Example 2:

Mr. Gupta owns a let-out property with the following details for FY 2023-24:

Annual Rent: ₹8 lakh

Municipal Taxes Paid: ₹60,000

Home Loan Interest: ₹3 lakh

Tax Calculation:

Gross Annual Value: ₹8 lakh

Municipal Taxes: ₹60,000

Net Annual Value: ₹8 lakh - ₹60,000 = ₹7.4 lakh

Standard Deduction: 30% of ₹7.4 lakh = ₹2.22 lakh

Interest on Home Loan: ₹3 lakh

Total Deductions: ₹2.22 lakh + ₹3 lakh = ₹5.22 lakh

Taxable Income: ₹7.4 lakh - ₹5.22 lakh = ₹2.18 lakh

Mr. Gupta will report ₹2.18 lakh as income from house property in Schedule HP.

Conclusion

Reporting income from house property in your ITR for AY 2024-25 requires careful documentation and understanding of tax provisions. By following the steps outlined in this guide, you can ensure accurate reporting and compliance. Maintain detailed records, claim all eligible deductions, and utilize exemption provisions to optimize your tax liability. Consult with a tax professional if needed to navigate the complexities of house property income reporting and maximize your tax savings. This proactive approach will help you stay compliant and make the most of your real estate investments.
 

Contact us now 
@ 8319024923 
@financesaathimedia@gmail.com

For more details visit our website at http://www.financesaathi.com
Don't wait! Time's running out! 
File your ITR today with Finance Saathi.