House property loss can be possible in the following 2 cases-
- Self-occupied property:- Gross Annual Value of self-occupied property is always NIL. If the taxpayer has borrowed a housing loan against his self occupied property, then the interest paid on such loan is deducted from his Net Annual Value which results in loss from house property.
- Let out house property:- If the taxpayer has borrowed a housing loan against let out property, then he shall pay interest on the housing loan. If the aggregate of standard deduction and interest paid on loan exceeds the Net Annual Value of the house property, then there shall be a loss from let out house property.
Set-off of house property loss:
- If the taxpayer is having more than one house property, then loss from one house property can be set off against incomes of other house properties.
- If there is no other house property income available to set off, then loss from house property can be set off against any other income (i.e. salary, business income, capital gains, other sources).
- If the loss still exists, then such loss can be carried forward to the next year. However, if a loss is carried forward to next year then it can be set off against house property income only. Hence, last year’s house property loss cannot be set off against any other income.
- A house property loss can be carried forward to the next 8 financial years only. If loss still persists after the end of 8 financial years, then such loss shall be forgone.