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Mr. Krishna owns a residential house in Delhi. Th…

Mr. Krishna owns a residential house in Delhi. The house is having two identical units. First unit …

Mr. Krishna owns a residential house in Delhi. The house is having two identical units. First unit of the house is self-occupied by Mr. Krishna and another unit is rented for ` 12,000 p.m. The rented unit was vacant for three months during the year. The particulars of the house for the previous year 2017-18 are as under: Standard rent ` 2,20,000 p.a. Municipal valuation ` 2,44,000 p.a. Fair rent ` 2,35,000 p.a. Municipal tax paid by mr. Krishna 12% of the municipal valuation. Light and water charges ` 800 p.m. Interest on borrowed capital ` 2,000 p.m. Insurance charges ` 3,500 p.a. Painting expenses ` 16,000 p.a. Compute income from house property of Mr. Krishna for the A.Y.2018-19.

Jeeba Aug. 04, 2018

While calculating income from house property, you have to calculate income for let out and self-occupied separately.
Pre-construction interest is allocated the ratio to both self-occupied and let out in five equal instalments from the completion of a house.
Insurance charges and painting expenses is not allowed as deduction while calculating house property income.

First Unit1/2 # Self-occupied
In case of self-occupied property, the annual value of house property is NIL.

Interest on loan is 1000*12000. So total loss will be 12000

Second Unit # Let out property.
Step 1: Calculation of Expected Rent
Expected Rent is higher of MV and FR but restricted to SR
MV is 244000, FR is 235000, SR is 220000

Therefore ER will be 220000

Step 2: Calculation of GAV:
GAV is higher of ER or AR
ER is 220000/2=110000
Actual Rent is 12000*9= 108000
Therefore GAV is 108000
If actual rent is less than expected rent due to vacancy then actual rent is to be taken as the GAV of house property.

Step 3: NAV=GAV-Municipal Taxes Paid for 1/2 portion
=108000-14640 =93360

Step 4: NAV less Deductions under Section 24....
NAV= 93360
Less: Deduction @30%= 28008
Less; Interest 1000*12=12000
Less; preconstruction interest=0

Income from let out property 93360-28008-12000=53352

Total income from house property is 53352-12000= 41352