Loss under the head Income from House Property

When you pay interest on a home loan for a Self Occupied House Property, you may end up with a loss under the head ‘Income from House Property’ in your Income Tax Return. In case of a Let Out Property there can be a Loss too – when your Net Annual Value is less than the Deductions allowed.

This is how Income from House Property is calculated –

Gross Annual Value (Rent or Nil in case of Self Occupied Property)

Less: Municipal Taxes Paid

= Net Annual Value

Less: Deductions under section 24

  • Standard Deduction @ 30% of Net Annual Value
  • Interest on Home Loan

= Income or Loss from House Property

 

If there is a loss it is allowed to be adjusted against any head of income of the same year in your Income Tax Return. For example –For financial year 2013-14,  if your income under the head Salary is Rs 4,50,000, Income from Other Sources is Rs 25,000 and your loss from House Property is Rs 1,80,000, your final tax liability will be calculated on Rs 4,50,000+25,000-1,80,000 = Rs 2,95,000.

In case the entire loss cannot be adjusted against Incomes of the same year in which loss was incurred, this loss can be carried forward for 8 assessment years. However, in the subsequent 8 years it can only be set off against income from house property and from no other head of income. If it is not adjusted in 8 subsequent years it can no longer be carried forward. Do remember to show this loss in your Return.

Do reach out to us if you need help!

 

6 Responses to Loss under the head Income from House Property

  1. SRINIVAS December 2, 2014 at 8:37 am #

    Dear executive…
    I am a salaried armed forces personnel.. I was a bit confused about filing itr bcz I thought since every month the tax is already cut from the salary slip I didn’t file itr since my accounts department (which used to handle my financial procedures) closed.. Now I learnt that itr filing is mandatory & hasn’t been filed also in my case since 2009.. I have still a home loan which I’m paying back…
    I believe there is a “tax-off” or something given in house loans… Can you pl tell mr if I”ll b getting any refund if I submit all the itr in this year?
    Srinivasan

  2. cleartax-team December 2, 2014 at 10:27 am #

    Hello Sir

    Kindly note that if your Gross Total Income (before giving any deductions under section 80) is more than the minimum amount of income which is exempt, you are required to file a return. Minimum exempt income for financial year 2012-13 and 2013-14 is Rs 2,00,000.

    Here are some more reasons to file your IT Return https://blog.cleartax.in/are-you-required-to-file-an-it-return/?

    The good news is you can still e-file your tax return on http://www.cleartax.in for financial year 2012-2013 and financial year 2013 -2014.

    In case of interest on home loan, most likely you may end up with a loss under the head ‘house property’ and that may infact lower how much tax you need to pay, depends on the complete facts of the case.

    You can start filing your return by creating a login on http://www.cleartax.in . Do write to support@cleartax.in if you face any issues.

  3. Raveendran K December 3, 2014 at 9:20 pm #

    Please tell me whether I can borrow money from my father who is my dependent for purchasing house and claim tax benefit for the interest paid to him.

  4. cleartax-team December 4, 2014 at 10:05 am #

    The income tax act does not specify from whom the loan should be taken.
    Your father will have to show the interest income in his return and pay tax on it.

    Other tax aspects can be commented upon once all the facts are available, suggest you drop an email to support@cleartax.in.

  5. S A Damodaran December 13, 2014 at 1:10 pm #

    Sir,

    I’m working an offshore on 28 days cycle and spent more than 183 days out of India. However my tax for salary is being paid to countries ever where i work.

    Is it required to file IT in india

  6. cleartax-team December 15, 2014 at 3:24 pm #

    Mr Damodaran – please note sufficient information is not available in your comment for us to suitably respond to your query – send us an email support@cleartax.in with more details and we shall revert to you.