Income is taxable under the head ‘house property’ if it is earned from a property consisting of any building or land. Individual taxpayers have the option to report their income from house property using different income tax return forms such as ITR-1, ITR-2, ITR-3, or ITR-4, as applicable.
If an individual receives income from a single house property (excluding any brought forward losses or losses to be carried forward from previous years), they can report it using either form ITR-1 or ITR-4. On the other hand, if they have income or losses from multiple house properties or need to report brought forward losses or losses to be carried forward under the head of ‘Income from House Property’, they should use form ITR-2 or ITR-3.
In this article, we will discuss how to compute income from house property and reporting of such income in one’s income tax return.
Types of house properties
When calculating income from house property for tax purposes, you need to determine the category of your property. This categorisation helps in determining the tax treatment and computation of income under the head “House Property.”
For income tax purposes, house property is divided into three categories: let-out, self-occupied, and deemed let-out house property.
Let out property: It is the property which is rented out to tenants, and you receive rental income from it.
Self-Occupied Property: A house property is classified as a self-occupied house property when the owner occupies it for his/her own residence. It is also classified as self-occupied when the owner is unable to occupy it because of being employed or carrying on business/profession at a different location, requiring them to reside in a non-owned property elsewhere. For income tax purposes, a taxpayer can treat up to two house properties as self-occupied properties.
Deemed Let-out Property: If the taxpayer possesses more than two residential properties for personal use, they have the option to consider up to any two properties as self-occupied. The remaining house property will be treated as a deemed let-out property.
In your income tax return, you will be required to select the appropriate type of house property from the options provided in the ITR form. It is essential to choose the correct category to ensure accurate reporting of income from the house property and avail the applicable deductions. Readmore…
Source By: economictimes
