Income From House properties
Annual value of assesses property, any buildings or lands which the assesses is owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him, the profits of which are chargeable under income tax, shall be chargeable to income tax under the head “Income from House Property”.
Some deductions also available from this income, income from a property is not taxable under the head ‘income from house property’ if ..
*Property used for own business or profession.
*Property is self-occupied for residence.
*Income from a farmhouse.
*Property income of a local authority.
*Property income of a university or educational institution.
*Property income of a trade union.
*Property given for charitable or religious purposes.
*Property given of a political party.
*Property income of an approved scientific research association.
What is annual value of house property:–
Annual value of house property is -‘the amount for which the property may reasonably be expected to be let out for a year’.
However, if your property is let out for the whole or a part of the financial year, the gross annual value will be the amount received during the year as a result of the letting out of the house property. This shall also exclude the rent that the taxpayer is unable to realize in the financial year.
The following four factors have to be taken into consideration while determining the annual value:
Rent payable by the tenant.
Municipal valuation of the property.
Fair rental value (market value of a similar property in the same area) of the property.
Standard rent payable under the Rent Control Act.
What is gross annual Value of house proerty:–
In the case of self-occupied property, the annual value is taken to be ‘nil’.
In the case of property that is rented out, the gross annual value is the municipal value, the ‘de facto rent’ (whether received or receivable) or the fair rental value, whichever is highest. If, however, the Rent Control Act applies to the property, the gross value cannot exceed the ‘de facto rent’ or the standard rent under the Rent Control Act, whichever is higher.