Thursday, 19 February 2015

Tax Break - Tax Incentive on Home Loan Repayment

The income earned from a house is taxable under the head `Income from House Property'. In order to come under this tax bracket, the person deriving the income must be the owner of that property.

The property should consist of a building or land adjacent to it. The property should not be in use to conduct a business or practice a profession. It is to be noted that the property must either be rented out or be capable of being rented out to derive a rental income.

In Case of One Property:
In case an individual has only one residential property, that property will be treated as a self-occupied. There will be no taxable income in respect of such property, provided the owner has not rented out the property for any time during the year, or earned any benefits from it.

In Case of More Than One Property:
In case a person owns more than one property, this exemption applies to only one of the houses. The owner has the discretion to choose any one of the properties to be designated as a self-occupied property. The deemed income from all other properties is taxable, even if they are self-occupied and no rental income is derived from them. The remaining properties, although not actually rented out, will be deemed to be rented out and notional rental value will be treated as taxable income in the hands of the owner.

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