ONE PROPERTY DEEMED SELF OCCUPIED
+
ALL OTHER PROPERTIES DEEMED LET OUT
Only one property can be deeded to be Self Occupied and its
NAV = 0.
+
Maximum interest deduction = 30000/200000
For other property , NAV is not zero as it is deemed let-out
Its NAV is calculated taking fair Rent and municipal value .
Interest deduction is also allowed without limit .
Note:-
Any one of the two house can be taken as self occupied by the assessee
(Whichever is most beneficial is to be chosen)
Example 1
| Particulars | House 1 | House 2 |
| Municipal valuation | 1000000 | 500000 |
| Fair Rent | 800000 | 600000 |
| Standard Rent | 900000 | 700000 |
| Actual Rent | 0 | 0 |
| (Both House were self occupied through out the year) | ||
| Municipal taxes paid | 3000 | 5000 |
| Interest on Housing Loan for Construction | 250000 | 160000 |
Since person owns two houses which are self occupied,we can take either of them as Self Occupied
Option 1 :- House 1 deemed to be self occupied ,House 2 deemed let out
View answer
Income of house property of house 1
| NAV | 0 |
| Less | |
| Standard Deduction | 0 |
| (30%*0) | |
| Interest on Housing Loan | |
| Interest Amt=250000 | |
| Max Limit for Self Occupied=200000 | -200000 |
| Income (Loss) from House Property | -200000 |
Income of house property of house 2
| A | Municipal valuation | 500000 |
| B | Fair Rent | 600000 |
| C | Higher of Municipal Value or Fair Rent | 600000 |
| D | Standard Rent | 700000 |
| E | Expected Rent (Lower of C or D) | 600000 |
| F | Actual Rent | 0 |
| G | GAV | 600000 |
| (Higher of Expected or Actual Rent) | ||
| Less | ||
| H | Municipal Taxes Paid | -5000 |
| I | NAV | 595000 |
| Less | ||
| J | Standard Deduction | -178500 |
| (30%*595000) | ||
| K | Interest on Housing Loan | -160000 |
| M | income from House Property | 256500 |
TOTAL INCOME FROM HOUSE PROPERTY OF BOTH HOUSES=-200000+256500=56500
Option 2 :- House 1 deemed to be Letout ,House 2 Self Occupied
View answer
Income of house property of house 1
| A | Municipal valuation | 1000000 |
| B | Fair Rent | 800000 |
| C | Higher of Municipal Value or Fair Rent | 1000000 |
| D | Standard Rent | 900000 |
| E | Expected Rent (Lower of A or B) | 900000 |
| F | Actual Rent | 0 |
| G | GAV | 900000 |
| (Higher of Expected or Actual Rent) | ||
| Less | ||
| H | Municipal Taxes Paid | -3000 |
| I | NAV | 897000 |
| Less | ||
| J | Standard Deduction 30% | -269100 |
| K | Interest on Housing Loan | -250000 |
| L | income from House Property | 377900 |
Income of house property of house 2
| NAV | 0 |
| Less | |
| Standard Deduction | 0 |
| (30%*0) | |
| Interest on Housing Loan | |
| Interest Amt=160000 | |
| Max Limit for Self Occupied=200000 | -160000 |
| Income (Loss) from House Property | -160000 |
TOTAL INCOME FROM HOUSE PROPERTY OF BOTH HOUSES=377900-160000=217900
Which Option to be chosen
View answer
OPTION 1 IS PREFERABLE AS IN THIS CASE INCOME FROM HOUSE PROPERTY IS LESS AND HENCE LESS INCOME TAX PAYABLE.
--endanswer--