Income Tax benefit from Second House – Rented or Deemed let out
If your property is rented or deemed let out, you need to use method given below to calculate Income or Loss from Property.
If your property is rented, then annual rental income must be known to you. If it is deemed let out, you need to assume annual rental value based on market rates.
You can deduct municipal tax paid on the house. In addition to that 30% standard deduction on rented income is allowed.
Income or Loss from Property = Rental Income – Municipality Tax – Standard Deduction 30% – Interest Paid
E.g Suppose my rented annual income from second property is Rs. 90000. Municipality Tax is Rs.2000 and I am paying Rs.1,20,000 as a home loan interest payment. So, income or loss from the property will be –
Income or loss from property = Rs.90000 – Rs.2000 – Rs.27000 – Rs.120000 = -59,000 Rs.
The negative income indicates it is a loss from housing property and we need to reduce this amount from your taxable income.
Is this correct ?
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