FAQs on Income from house property

Q. What if fair value of a property cannot be determined?

Ans. :-  Fair value means market value of the property. So if the fair value is not available or cannot be ascertained, fair market value of  similar property in the same location shall be taken as the fair value of the property in question.

Q. What if you are having loss from house property?

Ans. :- Self occupied property- Net Annual Value of self occupied property is always ZERO. Further if you are paying interest on housing loan, the same is deductible and this will result in loss from self occupied house property.

1. Let out property- If the aggregate of 30% standard deduction and interest paid on housing loan is greater than Net Annual Value, this will result in loss from let out property.

Such loss from house property is required to be adjusted against income from another house property and balance loss can then be adjusted against income from other heads during same year.

If the loss still persists, the same can be carried forward to the next year and set off against Income from house property in the coming years. However, loss can be carried forward only upto next 8 financial years from the year in which loss was incurred, and only if the return of Income was filed within the due date.

Q. What if out of the 2 floors, ground floor was used as residence by owner, however 1st floor was used for running his own business?

Ans. :- Gross Annual value of self occupied property is ZERO. And property shall not be charged with Income-tax if the same is used by owner for his own business/profession. Hence, in this case, Income from house property is NIL.

Q. How does an inherited house property gets taxed?

Ans. :- Eg. Mr. Om inherited a house property in Kolkata from his father. This remained vacant during the whole year. He is living in Ujjain in his own house. How the income from house property is taxable?

Only one property shall be treated as self occupied house property. All the other properties are shall be taxed. In this case, Mr. Om is having self occupied property in Ujjain, hence inherited property in Kolkata shall be treated as Deemed  let out and taxed accordingly.

Q.  Can I claim both HRA and deduction of housing loan?

Ans. :- Mr. Pankaj is working in Pune. He lives in a rented flat for which he pays monthly rent. Mr. Pankaj took a loan from bank to purchase the house in Nashik where his family is residing and he is paying Interest on housing loan every year. Mr. Pankaj received HRA from this employer company. Can he claim benefit of both?

Yes. Mr. Pankaj could claim both-

1. The benefit of HRA for rent paid for house in Pune,
2. The benefit of Interest paid on housing loan for house in Nashik.

Q. Can I claim the benefit of interest paid on housing loan if the house property is not registered in my name?

Ans. :- Income Tax Act provides that house property is taxable for the owner. However owner could be any person who is receiving Income from a property, even if he is not the registered owner of the property.

Hence, if a person is paying EMI’s of Housing loan and also enjoys the right to receive Income from property, he/she can obviously claim the benefit of interest paid on housing loan.