Taxability in special cases under House Property
Case 1 – Computation of Income of a house property which is self occupied for residential purposes – Section 23(2)(a)
When the house property is self occupied by the owner for his own residential purposes then the annual value of such house property shall be nil. No deduction for standard rent & municipal taxes are available. However the deduction of interest paid under section 24b is available subject to a limit of Rs 2,00,000/Rs 30,000 as applicable.
Case 2 – Computation of Income of a house property which could not actually be self occupied owing to employment at other place – Section 23(2)(b)
When the house property remain vacant owing to his employment, business or profession carried on at any other place and he has reside at that other place in a building not belonging to him then the annual value of such house or part of a house shall be nil. No deduction for standard rent & municipal taxes are available. However the deduction of interest paid under section 24b is available subject to a limit of Rs 2,00,000/Rs 30,000 as applicable.
Note :- In this case, assessee can also claim exemption for House Rent Allowance 10(13A).
Case 3 – Where assessee has more than one house for self occupation – Section 23(4)
If there are more than one residential houses which are occupied by the assessee for his own residential purpose, then he shall exercise an option to treat any one of the houses as self occupied and the other house will be deemed to be let out.
The annual value of the self occupied property (SOP) shall be nil.
The annual vale of deemed to be let out property shall be determined as per Section 23(1)(a), expected rent basis.
Assessee should exercise his option in such a manner that his taxable income is the minimum.
The option selected by the user can be changed on year-to-year basis.
If a house property has more than one residential unit and all such units are self occupied, the annual value of the entire house property shall be taken as nil as there is only on house property.
Case 4 – Computation of income of house property which have two or more residential units, one or more units are let out and remaining units are self occupied
The annual value for let out portion and for self occupied portion is computed separately as per the general provision applicable in the case of let out property and self occupied house property.
If municipal value or fair rent etc are not available separately then it shall be apportioned between the let out portion and self occupied portion on built-up area basis for calculating annual value for let our portion.
Municipal tax and interest shall also be apportioned on the basis of built-up/floor area.
Annual value of the self occupied portion shall be taken to be nil.
Case 5 – Where house property is owned by co-owner and self occupied by each of co-owner
Where the house property owned by the co-owners is self occupied by each of the co-owner, the annual value of the such property for each of such of co-owner shall be nil and each of the co-owner shall be entitled to the deduction of Rs. 30,000/ 1,50,000 under Section 24(b) on account of interest on borrowed money.
Case 6 – Where house property is owned by co-owner and entire or part of the property is let out
The income from such property or part thereof shall be first computed as if this property or part thereof is owned by one owner and thereafter the income so computed shall be apportioned amongst each co-owner as per their definite share.