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Navigating Property Income Calculations in the Fresh Tax Landscape
Navigating Property Income Calculations in the Fresh Tax Landscape
The new tax regime, effective from FY 2023-24, has brought changes to the calculation of income from house property. It categorizes properties into self-occupied, vacant, and let-out. For self-occupied houses, no deductions are allowed. For let-out houses, deductions can be claimed on home loan interest, municipal taxes, and a standard deduction of 30%. Vacant houses are treated as 'deemed to be let out' properties.
So, you're navigating the new tax regime and have income from house property? Let's break this down. From FY 2023-24, the new tax regime becomes the default for all taxpayers. This means no more automatic deductions like the popular section 80C (of Income Tax Act, 1961).
The Income Tax Act classifies house properties into three categories: self-occupied, vacant (deemed to be letout), and let-out. If you have a self-occupied house, no deductions are allowed under the new tax regime. This means if you bought the house on a home loan, you can't claim the deduction for interest paid on such a home loan.
For let-out houses, you can claim certain deductions under income tax laws. These include the interest on home loan, municipal taxes paid, and the standard deduction of 30%.
Vacant houses are treated as 'deemed to be let out properties'. The tax treatment for these properties is the same as let-out properties.
Remember, under the new tax regime, any loss from house property cannot be set-off against any other heads of income. However, if you have multiple let-out properties, loss from one can be set-off with income from another.
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