Self occupied and vacant property

PADMANABHAN K K (CA) (364 Points)
Replied 27 December 2011

The calaulation made by you is right. you also wait for other suggestions

CA PRABHAKAR JHA (ACA) (313 Points)
Replied 27 December 2011

No your calculation is not as per income tax provision. If you have only one property (as sepcified in query) , which was self occupied by you for 8 month during previous year and thereafter it remained vacant , because of your employment or some genuine reason, you stayed at a rented property.

In the given case your property will be deemed to be self occupied and Annual Value of the same will be NIL

As far as interest deduction is concern, there has been a ceiling of 1,50,000 in case of self occupied property ( Loan Taken on or after 1-4-99 and constructed within 3 years or acquired within 2 years from the date of loan)

Thus calculation will be as follows:

Net Annual Value(NAV) : NIL

(-)Std. Ded @ 30% of NAV : NIL

(-) Interest Paid 2.2lakh but

limited to 150000 : 150000

Income from HP : (1,50,000)

The loss may be carried forward for 8 Assessment year and can be setoff against house property income only.

Hope this will solve your purpose.

1 Like

vivek (article assiatant) (48 Points)
Replied 27 December 2011

Mr Jha is right while there is no any other answer.

thanks

meabhijit (Project Manager) (172 Points)
Replied 27 December 2011

Thanks Prabhakar, KK.

I have two property on my name. Assuming I let out the above property with loan for 8months at 10,000Rs/month rent and property remains vacant for 4months. Expected rent is 12,000Rs. Will the following calc be valid for Gross Annual Value:

1. Annual rent if let out for whole year = 10,000 X 12 = 120,000Rs

2. Loss due to vacany = 10,000 X 4 = 40,000Rs

3. Actual rent = annual rent - loss due to vacany = 120,000 - 40,000 = 80,000

Gross Annual Value (actual rent lower than expected rent only because of vacancy. So consider actual rent) = 80000

Net Annual Value: The Gross Annual Value above less Municipal tax (for 12months?) ===> Is this correct?

Taxable income from property:

Net annual value - 30% deduction - total loan interest per section 24 (ie. 2.2Lakh) ===> Is this correct?

The taxable income as negative can be adjusted against loss from property

Gurpreet Kaur (Admin) (23 Points)
Replied 27 December 2011

In the second situation

GAV = Rs 80,000/-

Less: Municipal Taxes = Subtract if any

Net Annual Value = 80,000/-

Less :

Deduction u/s 24a @ 30% = (24,000)

Deduction u/s 24b = = (2,20,000/-)

Loss from house property = Rs 1,64,000/-

This loss can be set off from income from any other head in the current year and the remaining loss (after set off) can be carried forward for 8 subsequent years.

But for subsequent years, this loss can only be set off from income from house property.

CA Kumar Mukesh (CA CMA FINAL and Advance Excel Trainer) (6881 Points)
Replied 27 December 2011

You are not correct this time also

GAV can be calculated are as follows

Standard Rent 12000*12= 144000/-

Less loss due to Vacancy 10000*4= 40000/-

Net 104000

Amt received 10000*8= 80000

higer of above 104000

Less Standard Deduction 31200

NAV = 72800

less Deduction u/s 24(b) 220000/-

loss carried forward 147200

Raghavender Maale (CA Final student) (41 Points)
Replied 27 December 2011

Mr. Mukesh is correct

When Expected rent(ER) is greater than actual rent received(ARR) for the factor of vacancy then you need to consider ER - RVP for calculation of GAV.

12000*12=144000 - ER

10000*8=80000 - ARR

10000*4=40000 - RVP

Here ER > ARR, hence GAV=ER-RVP which comes to 144000-40000=104000.

Then you can calculate NAV, deductions etc.

Anvesh Desai (Chartered Accountant) (156 Points)
Replied 27 December 2011

Originally posted by : Prabhakar Jha
	No your calculation is not as per income tax provision. If you have only one property (as sepcified in query) , which was self occupied by you for 8 month during previous year and thereafter it remained vacant , because of your employment or some genuine reason, you stayed at a rented property. In the given case your property will be deemed to be self occupied and Annual Value of the same will be NIL As far as interest deduction is concern, there has been a ceiling of 1,50,000 in case of self occupied property ( Loan Taken on or after 1-4-99 and constructed within 3 years or acquired within 2 years from the date of loan) Thus calculation will be as follows: Net Annual Value(NAV) : NIL (-)Std. Ded @ 30% of NAV : NIL (-) Interest Paid 2.2lakh but limited to 150000 : 150000 Income from HP : (1,50,000) The loss may be carried forward for 8 Assessment year and can be setoff against house property income only. Hope this will solve your purpose.

Anvesh Desai (Chartered Accountant) (156 Points)
Replied 27 December 2011

Originally posted by : ✇ Mukesh Kumar
	You are not correct this time also GAV can be calculated are as follows Standard Rent 1200012= 144000/- Less loss due to Vacancy 100004= 40000/- Net 104000 Amt received 10000*8= 80000 higer of above 104000 Less Standard Deduction 31200 NAV = 72800 less Deduction u/s 24(b) 220000/- loss carried forward 147200

Anvesh Desai (Chartered Accountant) (156 Points)
Replied 27 December 2011

Originally posted by : ✇ Mukesh Kumar
	You are not correct this time also GAV can be calculated are as follows Standard Rent 1200012= 144000/- Less loss due to Vacancy 100004= 40000/- Net 104000 Amt received 10000*8= 80000 higer of above 104000 Less Standard Deduction 31200 NAV = 72800 less Deduction u/s 24(b) 220000/- loss carried forward 147200

meabhijit (Project Manager) (172 Points)
Replied 28 December 2011

Thanks Mukesh, Raghavender for the insights.

Please review if the following calc is correct.

Expected rent:12,000Rs Actual Rent: 10,000Rs. Assume property let out for 4months. Remaining timeframe propety is vacant. Municipal tax: 27000Rs/year

Expected Rent: 12,000 x 12 = 144000Rs

Actual Rent Received: 10,000 x 4 = 40,000Rs

Loss due to vacancy: RVP: 10,000 x 8 = 80,000Rs

Here ER > ARR, hence GAV=ER-RVP ie GAV is 144000 - 80,000 = 64000Rs

Income from property Calc:

GAV = 64000

Municipal Tax: 27000

Net Annual Value(NAV) : 64000 - 27000 = 37000

30% Standard Deduction: 30% of NAV = 11100

Intrest against property: 220000

Taxable income from property: NAV - Standard Deduction - Interest = -194100Rs (loss)

Raghavender Maale (CA Final student) (41 Points)
Replied 28 December 2011

Yes this calculation is correct.

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 29 December 2011

Originally posted by : meabhijit
	Thanks Mukesh, Raghavender for the insights. Please review if the following calc is correct. Expected rent:12,000Rs Actual Rent: 10,000Rs. Assume property let out for 4months. Remaining timeframe propety is vacant. Municipal tax: 27000Rs/year Expected Rent: 12,000 x 12 = 144000Rs Actual Rent Received: 10,000 x 4 = 40,000Rs Loss due to vacancy: RVP: 10,000 x 8 = 80,000Rs Here ER > ARR, hence GAV=ER-RVP ie GAV is 144000 - 80,000 = 64000Rs Income from property Calc: GAV = 64000 Municipal Tax: 27000 Net Annual Value(NAV) : 64000 - 27000 = 37000 30% Standard Deduction: 30% of NAV = 11100 Intrest against property: 220000 Taxable income from property: NAV - Standard Deduction - Interest = -194100Rs (loss)

Gaurav (CA Job) (21 Points)
Replied 10 August 2015

Hi, I have a query please help

I am staying in Delhi at a rented accomodation, and I have purchased a flat in Noida which is owned jointly by myself and my wife. We have also taken a joint loan, however the EMI is paid from my account to the bank.

Query:

1. Will the property in Noida will be treated as a self occupied property, i.e. annual value is nil.

2. Can I claim deduction upto Rs.200,000 on interest component under section 24.

2. Can my wife also claim a deduction of interest upto Rs.200,000 u/s 24 as she is also a joint owner. She is not contributing in EMI payment, as it is going from my bank.

Thanks for help