What is Standard Deduction Under House Property?

Hi Buddy,

I am a tax consultant. Often clients come to me to know about their house property standard deductions. I have realised that for most Indians, buying a home is one of the most prevalent long-term investing ambitions. The EMI on a home loan consumes a significant portion of one's salary. 

The government has offered a variety of tax benefits for residential property under Section 24 of the Income Tax Act. I would like to highlight the fact that the following income is taxable under the Income Tax Act of 1961's section 'Income from House Property.'

• Rental income from a rented home

• For income tax purposes, the annual value of a property that is 'deemed' to be rented out ( when you own more than two house property)

• A self-occupied property has no annual value

• A self-occupied property's annual value is zero or even negative if home loan interest is paid. If you rent out the premises, the rent earned is your Gross Annual Value. Reasonable rent of a similar place is your Gross Annual Value for a deemed to be hired out property

However if you are wondering what is standard deduction under income from house property, I would like to introduce all the deductions under house property;

• Municipal Deduction

The annual amount paid to the municipal corporation of that area is known as municipal taxes. To calculate the Net Annual Value of the residential property, subtract municipal taxes from the Gross Annual Value. Only municipal taxes paid and borne by the owner during that fiscal year can be subtracted.

• Standard 

Standard deduction allowed under income from house property is 30% of the above-mentioned Net Annual Value. This 30% deduction is granted regardless of whether your real property costs are higher or lower. As a result, this deduction is made regardless of any actual expenses you may have incurred for insurance, repairs, energy, or water supply, among other things. The standard deduction is likewise nil because the Annual Value of a self-occupied dwelling property is 0.

After understanding what is standard deduction under house property, let’s move on to the third and final deduction which is:

• Interest on a home loan for the property can be deducted 

If the owner or his family lives in the residence, the owner or his family can claim a deduction of up to Rs.2 lakh on their home loan interest. The same procedure is used when the residence is empty. If the home has been rented out, the entire interest on the house loan may be subtracted. If you don't meet any of the conditions mentioned below for the Rs. 2 lakh rebate, your interest deduction is restricted to Rs.30,000:

• The house loan must be used for the purchase and building of a home, and it must be taken out on or after April 1, 1999,

• The purchase or construction must be completed within 5 years of the loan being taken out

I hope this suffices your query about house property standard deductions:)

You can calculate your EMI on a home loan through this,

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