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Secti on on 24 D ed educti on ons fr om om H ou ouse Pr op oper ty ty Incom e - T he he cl ea ear Ta Tax Bl og og
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Section 24 Deductions from House Property Income by Cleartax-Team Cleartax-Team on on November 11, 2014 in Income from House Property
Income from House Property is possible in these cases – Rental Income on a let out property Annual Ann ual Value Value of a prop property erty which w hich is ‘de ‘deem emed’ ed’ to be let out for income tax purposes purposes ( when you own mo more re than one house property) Annual Ann ual Value Value of the property property which is self occupi occ upied, ed, which is
Nil
Under section 24 of the Income Tax Act you are allowed to make certain deduction from the Net Annual Value of your House Property. Net Annual Value is Gross Annual Value
less Municipal
Taxes Paid. In case
the property is let out, its rent received is your Gross Annual Value, whereas in case of a deemed to be let out property, a reasonable rent of a similar place is your Gross Annual Value. For a self occupied house property the Gross Annual Value is
Nil .
There are only 2 deductions deductions available under section 24 Standard Deduction – Deduction – Standard Deduction is 30% of the Net Annual Value calculated above. This 30% deduction is allowed is allowed even when when your actual expenditure expenditure on the property is higher or lower. Therefore this deduction is irrespective of the actual expenditure you may have incurred on insurance, repairs, electricity, water supply etc. For a self occupied house property, since the Annual Value is
Nil ,
the
standard deduction is also 0 on such a property. Deduction of Interest on o n Home Loan for the property – property – In case you take a home loan for purchase, construction, repair, renewal or reconstruction of your house property – the interest is allowed as a deduction de duction from from the Net Annual Value. Deduction for interest on money borrowed is allowed on accrual basis (allowed even though interest may not actually have been paid), so keep claiming your interest deductions each year basis interest that is due (instead of interest that is paid). Do remember that no deduction is allowed for any brokerage or commission for arranging the loan. In case of a self occupied house property, this deduction is allowed to be claimed and therefore, you may in such a case have a loss under the head House Property. The total amount allowed towards this deduction for a self occupied house property is Rs 2,00,000 beginning assessment year 2015-16. In case of a let out or a deemed to be let out property, the entire interest is allowed as deduction under section 24. You can start claiming this interest when the construction of your property is complete. Pre-construction Pre-constructio n interest interest – – is allowed when you have taken a loan for purchase or construction of a house http://bl og.cl ear tax.i n/secti on- 24- deducti ons- house- pr oper ty- income/
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property (not allowed in case of loan for repairs or reconstruction). The deduction for this interest is allowed in 5 equal installments starting from the year in which the house is purchased or the construction is completed. For example, if construction of your property completed in FY 2014-15, on 16th June 2014, you can claim 1/5th of interest paid uptil 31st March 2014 when you file your return for FY 2014-15. Though pre construction interest is allowed to be deducted on the basis of 1/5th each year beginning the year in which the construction is completed – the total amount that can be claimed in a year should not exceed Rs 2,00,000 in case of a self occupied house property. Conditions for claiming Interest on home loan deduction – You need to meet all the below 3 conditions to claim this deduction Loan has been take after 1st April 1999 for purchase or construction The acquisition or construction is completed within 3 years from the end of the financial year in which the loan was taken There is interest certificate available for the interest payable on the loan Note that your interest deduction may be limited to Rs 30,000 if any one of these conditions is met – Loan is borrowed before 1st April 1999 for purchase, construction, repairs or reconstruction of house property Loan is borrowed on or after 1st April 1999 for repairs, renovation or reconstruction of house property. If you have any questions regarding deductions allowed to you from your House Property Income. REACH OUT TO US
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Secti on 24 D educti ons fr om H ouse Pr oper ty Incom e - T he cl ear Tax Bl og
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