Income Tax News: Income derived from real estate, such as buildings or land, is classified as taxable “house property” income. Individuals may use the ITR-1, ITR-2, ITR-3, or ITR-4 tax return forms to record this income.
What Does House Property Income Mean?
“Income from house property” refers to any revenue derived from a home, including rent and transfers of equity. As per the Income Tax Act, ‘house property’ basically refers to any type of property, including offices, warehouses, buildings, and houses. This revenue is one of the five categories that go into determining your gross total income (or total earnings) for the year. Nonetheless, there are some deductions that can be taken before this income is taxed.
Recognising Rental Income from Residential Property
Three requirements must be satisfied for income to be classified as “Income from House Property”:
- The property could be a flat, a piece of land, or a structure
- The property should belong to the taxpayer
- It is not appropriate to use the property for professional or business reasons
Taxation of house properties
The taxation of house properties varies depending on whether they are inherited, rented out to tenants, or self-occupied. Here is a discussion of the various types of home properties and how they impact taxation.
Let Out Property
This is the process by which you rent out your property to renters and receive rental income from them.
Self Occupied Property
A home is deemed self-occupied if you are the only occupant. Tax-wise, you can still regard it as self-occupied even if you are unable to dwell there due to employment or business elsewhere. You may count up to two homes as self-occupied for tax purposes.
Deemed Let Out Property
You can designate two of your residences as self-occupied if you own more than two for personal use. The remaining properties are regarded as let-out properties. You will need to select the appropriate kind of residential property from the list of alternatives on your income tax return. Selecting the appropriate category is essential for correctly reporting your rental revenue and obtaining the appropriate deductions.
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