Loss from house property

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Querist : Anonymous

Querist : Anonymous (Querist)

01 September 2016 Loss from House property ( whether self Occupied OR let out) can be set off against income from House property.

Expert : Anonymous

Expert : Anonymous (Expert)

01 September 2016 Already answered

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2024 Loss from house property can be set off against other sources of income under specific rules and conditions as prescribed by the Income Tax Act, 1961. Here’s a detailed explanation:

### 1. **Loss from House Property**

**Types of House Property**:
- **Self-Occupied Property**: A property that you live in. For tax purposes, you can claim a deduction for interest on home loan, but the rental income is considered nil.
- **Let-Out Property**: A property that you rent out and earn rental income from.

**Loss Calculation**:
- **Income from House Property**: Computed as `(Gross Annual Value) - (Municipal Taxes) - (Interest on Home Loan) - (Repairs and Maintenance)`.
- **Loss**: If the total expenses (including interest on home loan) exceed the rental income or if the property is self-occupied, a loss is incurred.

### 2. **Set-Off and Carry Forward of Loss**

**Set-Off Against Income**:
- **Against Income from House Property**: Loss from one house property can be set off against income from another house property in the same financial year.
- **Against Other Income**:
- **Under Section 71**: If the loss is from a let-out property, it can be set off against income from other sources (such as salary, business income, etc.) up to ₹2 lakh in a financial year.
- **Excess Loss**: Any loss exceeding ₹2 lakh after set-off can be carried forward to the next financial year.

**Carry Forward of Loss**:
- **Carry Forward for 8 Years**: The unadjusted loss, i.e., the loss that exceeds ₹2 lakh or the loss from self-occupied property, can be carried forward for up to 8 years and can be set off against income from house property in future years.

### 3. **Specific Conditions**

- **Self-Occupied Property**: Loss from a self-occupied property cannot be set off against any other income. The maximum deduction for interest on home loan for self-occupied property is ₹2 lakh under Section 24(b). If this results in a loss, it cannot be set off against other income but can be carried forward.

- **Let-Out Property**: Loss from a let-out property can be set off against other sources of income up to ₹2 lakh. The remaining loss (if any) can be carried forward.

### Summary

- **Loss from Self-Occupied Property**:
- Can’t be set off against other income.
- Can be carried forward for up to 8 years.

- **Loss from Let-Out Property**:
- Can be set off against other income up to ₹2 lakh in the current year.
- The excess loss can be carried forward for up to 8 years.

**Example**:
If you have a loss of ₹3 lakh from a let-out property, you can set off ₹2 lakh against other income in the current year. The remaining ₹1 lakh can be carried forward to be set off against future income from house property.

### Filing the Return

- **ITR Form**: Losses should be declared in the Income Tax Return (ITR) form appropriate for your income, such as ITR-2 or ITR-3, depending on the nature of your other income.

It is advisable to maintain proper documentation and consult with a tax professional to ensure that you meet all compliance requirements and maximize your tax benefits.

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