House Property Income Tax

What is Income from House Property?

House property income refers to the income you have earned by renting out your property, which could be residential, commercial, or adjacent land of the taxpayer. The income that comes from rent is taxed under this head of Income. To calculate house property income tax, we must determine what items fall under this category and what do not.

Here are the conditions that need to be satisfied for an income type to qualify in this category:

• The income should be rental Income, and it might also include the lease income.
• The rent should be paid for the building or the land attached to it, such as a parking lot or gardens.
• If the taxpayer has a business of renting out properties, it will be classified as business income and not as house property income.
• The property can be a commercial house property or a non-commercial house property.

Classification of House Property

The Income tax classifies the properties into four types broadly:

1. Self-occupied house property: This kind of property is used for residential purposes. For income tax purposes, up to two houses are considered self-occupied.
2. Let out house property: It includes the house property that is rented out for the whole year or the part of the year. Tax on rental income is considered on the let-out house properties.
3. Deemed to be let-out property: If someone has house property in excess of the 2 self-occupied properties, it is deemed a let-out property. If the property is left vacant, then it will also be in the category of deemed properties
4. Under Construction Property: The properties that are under construction and not yet completed, but are also considered for taxation purposes. In these cases, the rental income cannot be claimed because the property is not let out yet.