Cases when Rental Income from Building is not treated as House Property Income

Ritik Chopra | Last updated: 07 July 2021

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This article outlines specific situations where rental income from a building is not classified as house property income for tax purposes. These include letting out property to facilitate your own business, income derived from sub-letting a property you rent, composite lettings where rent for the building cannot be separated from furniture or other facilities, and income from running a hotel or providing paying guest accommodation.

There are many instances where rental income from building is not treated as house property income which will be discussed in this article. The following are the main cases where rental income will not be considered as house property income: (i) Letting out of house property for smooth conduct of

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FAQ :

Rental income is treated as business income if you let out a property to facilitate your own business or profession, or if you are in the business of running a hotel or providing paying guest accommodation.

Income from sub-letting a property is taxable under the head 'income from other sources', not 'house property', because the sub-letter is not the owner of the building.

If the rent for the building and the furniture/facilities cannot be separated, the composite rent is treated as income from other sources or business income. If it can be separated, only the building rent is treated as house property income.

No, if the main purpose of letting out the property to entities like a bank, post office, or police station is to facilitate your own business or profession, the income is treated as business income.

Income from running a hotel business or providing paying guest accommodation is treated as business income. However, if you let out a hotel building to someone else to run the hotel business, that rental income is treated as house property income.