How to calculate Income from House property for income tax?

POSTED BY Ojil Casi ON November 26, 2011 2:58 pm COMMENTS (6)

I work in Bangalore and live in rented house Bangalore with my family and pay a rent of Rs.20000. I have another newly constructed house in Kochi, Kerala for which I got the posession certificate in January 2009 for which I will be paying interest of Rs.4,80,000 this year and had paid of Pre EMI interest of around 570,000 which can be reclaimed in in five equal installments after the house cam to posession.

My house in Kochi has a tenant who is paying me a monthly rent of Rs.11000. Can some one let me know how to calculate the income from house property so that I can claim tax deduction on the entire interest with out the limit of 1,50,000?.

My company has asked me to furnish a letter from CA . It would be helpful If you could share the format as well

6 replies on this article “How to calculate Income from House property for income tax?”

  1. Ojil Casi says:
    December 8, 2011 at 5:36 pm

    Thank you Ashal. This was really useful.

    In our company we need to submit a letter from CA to get the exemption for the entire amount and I am claiming an exemption of 390000 instead of 150000

    Reply
  2. KK BABU says:
    December 8, 2011 at 5:29 pm

    Thanks Mr Ashal Ji. I shall discuss with our HR to get addtional tax benefit.

    thanks – KK Babu

    Reply
  3. ashal jauhari says:
    December 8, 2011 at 4:55 pm

    Dear KKBabu, It’s a normal practice among employers to provide only basic benefit of 1.5L Rs. for self occupied house, although the house in question is on rent & the person in question wants to set off his losses from house property with his salary income.

    The Above calculation is correct. for Authenticity of the info, please read the section 24 of income tax, 1961.

    Thanks

    Ashal

    Reply
  4. KK BABU says:
    December 8, 2011 at 12:42 pm

    Dear Mr Ashal Jauhari ji

    I hope you are correct in the above calculations.
    My doubt is whether we can offset entire ‘G’ of the above steps or it is to be limited to Rs. 1,50,000/-.

    Here, in my case for similar calculations, our HR is limiting it to max of 1.5 Lakhs.
    Is there any clearcut guidelines from IT dept on this?

    Thanks and Regards, KK Babu

    Reply
  5. ashal jauhari says:
    November 27, 2011 at 7:39 am

    Dear Ojil casi, here is the calculation for you.

    A. Yearly rental value = 11000*12 = 132000
    B. Property Tax paid to municipal authorities = 2000 (please put in your actual no. here)
    C. Net rental income = A – B = 130000
    D. Standard deduction @ 30% of C = 39000
    E. Interest paid for borrowed capital in current FY = 480000
    F. Interest paid in prev. FY @ 20% = 20% of 570000 = 114000
    G. Income From house Property = C – (D +E+F) = 130000 – 633000 = -503000

    Since G is a loss it ‘ll be available for set off against your income from salary.

    thanks

    Ashal

    Reply
  6. Consultants says:
    November 26, 2011 at 11:25 pm

    Based on your details
    Rent received 11,000*12 = 132,000
    Less: 30% 39,600
    Interest (114 + 480) 594,000
    Loss frm HP 501,600

    If u need more help in filing ur returns or other taxation matters contact us

    Reply

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