Q1. On what basis is income from House Property taxed?
The annual value of house properties owned by a person other than those which are occupied by him for the purpose of any business or profession carried on by him is charged to Income-tax as 'Income from House Property'. Annual value of a property is defined as 'the sum for which the property might reasonably be expected to let from year to year'. If the property is in the occupation of the tenant, the taxes levied by any local authority in respect of the property shall, to the extent such taxes are borne by the owner should be deducted in determining the annual value of the property of that previous year in which such taxes are actually paid by the owner.
If the property is let and if the rent received or receivable is in excess of the sum mentioned above, the rent so received or receivable shall be taken to be the annual value.
Q2. How is the annual value of a self-occupied property computed?
The annual value of a house or part of a house shall be taken to be NIL if
(i) it is in the occupation of the owner for the purposes of his own residence and
(ii) it is not actually let during any part of the previous year and no other benefit therefrom is derived by the owner.
Where two or more houses are in the occupation of the owner for the purposes of his own residence, then the annual value shall be taken to be Nil only in respect of any one house of his choice. The annual value of the remaining house/houses will be computed as if the said house/houses were let.
Q3. What are the deductions admissible while computing income from House Property?
The following deductions are to be made from the annual value while computing income from house property :-
(a) 30% of the annual value, in respect of repairs and collection charges;
(b) interest payable on loan taken for acquisition, construction, repair, renewal or re-construction of the property;
In respect of a self-occupied property whose annual value is taken as Nil, no deduction is admissible except deduction for interest payable on loan as mentioned at (b) above, subject to a ceiling of Rs.30,000/- ( if the property is acquired or constructed with capital borrowed on or after 1.4.1999 and if the acquisition or construction is completed before 1.4.2003, the interest allowable as deduction will be Rs.1,50,000/- instead of Rs.30,000/-).
Q4. If there is a loss under the head 'Income from House Property', can it be adjusted against other income?
Yes, any loss under the head 'Income from House Property' can be adjusted against income under any head in the same year.
Q5. Can the loss under the head 'House Property'be carried forward to the subsequent assessment years?
Yes, from A.Y.1999-2000 and onwards loss under the head 'House Property' which cannot be wholly set off against income from any other head in the same assessment year can be carried forward and set off against income from House Property for immediately succeeding 8 assessment years.
Q6. The property is owned by two or more persons and their respective shares are definite. Will the income from such property be assessed in the hands of the association of persons?
No, the income from such property will not be assessed in the hands of the association of persons. The share of each person in the income from the property shall be included in his total income.