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House Property: Deduction under section 24

Mr. C.S. Sudheer | Posted On Thursday, January 15,2009, 06:04 PM

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House Property: Deduction under section 24



1. What is House Property Income?

House property income is defined as income earned by a person through his house or land.

Tax is on rent received or receivable both. In other words, charge is on the real income as well as potential incomes that a property can generate. But if property is used assessee's own business then the potential it will be taxable under the head of profit or loss from business/ profession. Tax is on Annual value (AV) of building or land owned by assessee.

2. How to calculate AV of the property?

AV = NIL, if property is occupied by the assessee for the whole year.
AV = Annualised rent received/receivable- proportionate rent for the period of occupation of property by the assessee.
AV calculated would be eligible for deduction U/s-24.

(if assessee has two houses & if he occupies both the houses, AV calculated as above will be applicable in case of only one house, for the another house AV would be annualized rent receivable.)

In case where the assessee has only one residential house but it cannot be occupied by him for the reasons that he stays with his parents or owing to his employment, business or profession carried out on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of such house shall be taken to be nil if the house is not actually let and no other benefit is derived by the owner from such house.

See Also: BBMP Property Tax

3. What are the deductions U/s-24?

Following deductions are available :

  • A sum equal to 30% of the AV.
  • Interest on money borrowed for acquisition/construction/repair/renovation of property is deductible on accrual basis. Interest paid during the pre construction/acquisition period will be allowed in five successive financial years starting with the financial year in which construction/acquisition is completed. Deduction up to maximum of Rs. 1, 50,000/- is available provided that the acquisition/construction of the property is completed within three years from the end of the financial year in which the capital was borrowed. This deduction is also available in respect of a self occupied property.


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