Buying a home! – Almost everyone has this one goal in their mind and they save to achieve this goal one day. However, owning a house comes with some responsibilities. Paying property tax every year is one of them. For this, you need to know whether your property is a let out property, self-occupied property, or deemed let out property.
What is Self Occupied PropertySelf-occupied property is a property where you or your family stays and the question of getting rental income out of this property doesn’t arise.
What is Let Out PropertyLet Out property is a property that you’ve given out on rent. This is why the rental income is considered as your income from house property in this case.
What is Deemed Let Out Property in Income TaxIf you own more than two properties, according to the law, you can treat only 2 (before the Budget 2019, it was only 1 property) as self-occupied while the 3rd property (no matter whether let out or not) will be deemed to be let out. Now you understand the deemed let out property meaning.
The annual value of such properties is determined under the Income Tax Act, 1961 Section 23(1)(a) on which tax will be levied. The “annual value" is the property’s inherent capacity to earn income.
4 factors are considered for determining the annual value of a property:1) Actual rent receivable or received.
2) Municipal value of the property (Municipal authorities determine this value to levy municipal taxes).
3) Fair rent (that is equal to rent that a similar house receives in the similar or same area if rented out for 12 months)
4) Standard rent (as fixed under the Rent Control Act)
This is all on self-occupied, let out, and deemed let out house property.
Read in detail:
What is deemed to be let out property?
What is let out property?
What is self occupied property?
How to calculate property tax?
I hope now you understand the difference between self-occupied, let out, and deemed let out property.
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What is deemed let out property?
Banno
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2021-12-29T17:52:30+00:00 2021-12-29T18:14:50+00:00Comment
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