Owning a house property can be both rewarding and complex from a tax perspective. Whether you earn rental income or live in your own home, understanding the latest tax rules (effective April 2025) is essential for accurate tax filing and maximizing deductions.

This guide covers everything you need to know about Income from House Property, including calculation methods, deductions, exemptions, and recent updates.

1. What is Income from House Property?

     Under Section 22 of the Income Tax Act, any income earned from a property you own (residential or commercial) is taxable under the head “Income from House Property.”

Types of House Property for Tax Purposes:

1. Let-Out Property – Rented to tenants.
2. Self-Occupied Property (SOP) – Used for personal residence.
3. Deemed Let-Out Property – If you own more than one house, the additional properties are considered “deemed let-out” even if not rented.

2. How is Taxable Income Calculated?

The income from house property is calculated in 5 steps:

Step 1: Determine Gross Annual Value (GAV)

• For Let-Out Property: Higher of:
  • Actual rent received
  • Municipal value or Fair Market Rent
• For Self-Occupied Property (SOP): GAV = Zero (if only one house is owned).
• For Deemed Let-Out Property: Expected rent is considered.

Step 2: Subtract Municipal Taxes (if paid)

• Only actual taxes paid in the financial year can be deducted.
• Net Annual Value (NAV) = GAV – Municipal Taxes

Step 3: Apply Standard Deduction (30% of NAV)

• Section 24(a) allows a flat 30% deduction from NAV for repairs & maintenance.
• No need for actual expense proofs.

Step 4: Deduct Home Loan Interest Section 24(b)

• For Let-Out/Deemed Let-Out Property: Full interest paid is deductible.
• For Self-Occupied Property: Max deduction ₹2 lakh per year (if loan is for purchase/construction).

Step 5: Final Taxable Income

Taxable Income = (NAV – Standard Deduction – Interest on Home Loan)

3. Key Deductions & Exemptions (2025 Updates)

A. Standard Deduction (30% of NAV)

• Automatically allowed, no bills required.

B. Interest on Home Loan Section 24(b)

• Pre-construction interest (for under-construction properties) can be claimed in 5 equal installments after construction is complete.
• Joint home loans: Each co-owner can claim deductions proportionately.

C. Loss from House Property

• If deductions exceed rental income, it results in a loss.
• Can be adjusted against other income (salary/business) up to ₹2 lakh/year.
• Unadjusted losses can be carried forward for 8 years.

D. No Tax on Arrears Rent Section 25(A)

• If you receive unrealized rent from previous years, 30% is deducted, and only 70% is taxable.

Final Thoughts

     Understanding Income from House Property rules helps in minimizing tax liability while staying compliant. Ensure you maintain proper records and consult a tax advisor for complex cases.

Stay updated with the latest tax laws to maximize savings!