Tax depreciation on rental property

Tax queries 11263 views 3 replies

Nisha

24 Points Posted on 21 January 2014

I recently bought an investment property (residential) in India and have rented it out. As i dont live in India, I m a bit unsure on how depreciation on investement properties work there. Here in Australia we can obtain a depreciation schedule for the entire property (both for the building and fixtures and fittings) for 20 years and claim a chunky deduction each year. Is there a similar schedule that i can get in India from a qualified valuer?

Alternatively, can some one guide me to the appropriate depreciation tables and/or tax legislation relating to taxation of rental income in India for an NRI?

Any help would be greatly appreciated.

Replies (3)

Mihir

Wealth Manager

5293 Points Posted on 21 January 2014

Depreciation can be claimed by person carrying on business. An individual purchasing a property and earning rental income cannot claim depreciation. However, they may claim deduction u/s 24 upto 30% from the rental income.

Raunak Jain

Chartered Accountant

61 Points Posted on 21 January 2014

On rental income a standard deduction is allowable @ 30% u/s 24(a) of income tax act and no deprication is allowable on investment property to individual assessee.

Rashid EL

Audit Assistant

31 Points Posted on 21 January 2014

Since your rental income is chargeable under the head "Income from house properties", as per sec 24(a) of the Income tax act you will be eligible for a standard deduction @ 30% on your total rent.

You will not be eligible to claim any depreciation on the said residential property.

How ever, in addition to the 30% of standard deduction mentioned above, you will be eligible to claim to interest on loan taken for construction and/or development of such property.

If such interest is paid to a non resident Indian, you have to deduct tax on such interest payment to get the interest on loan as a deduction.