Income From House Property

If you have a property or a house in your name, the income on that property will qualify for a tax deduction according to the regulations of the Income Tax Act, 1961. You will, however, be required to pay a certain property tax for the same!
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Tax Deduction on Self-Occupied Property (Own House)

Mahesh, a resident of Pune, availed a home loan to purchase a new home in FY 2016-17. The residential property is self-occupied and he resides in it with his wife and children. He paid Rs.2.16 lakh towards the interest on his home loan. He also incurred Rs.10,000 to repair the property, and paid Rs.8,000 to the municipality as property tax. The income from this property is nil considering Mahesh himself occupies it.

Under Section 24 of the Income Tax Act, Mahesh is allowed to claim a deduction of up to Rs.2 lakh. The loss made by Mahesh on his house property is as under:

Particulars Amount
Gross Annual Value Minus Property Tax Nil Nil
Net Annual Value Minus Interest on Home Loan Nil Rs.2 lakh
Loss Incurred on Property Rs.2 lakh

Mahesh can deduct this loss from his income from other sources for FY 2016-17.

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