# Income from House Property — Chargeability

## The Two Conditions

Income is taxable under the head House Property only if BOTH conditions are satisfied:

### Condition 1 — Income must be from BUILDING and LAND APPURTENANT thereto

Building includes:

Residential buildings
Factory buildings
Offices, shops, godowns
Other commercial premises

Land appurtenant = land connected with the building, e.g., garden, parking, garage.

Important exception: Income from VACANT LAND (i.e., bare land not appurtenant to any building) is NOT taxable under House Property. It is taxable under:

Income from Other Sources (default), OR
PGBP if held as business asset

### Condition 2 — Assessee must be the OWNER of the property

Key clarifications:

1. Ownership in the Previous Year is what matters. Ownership status in the Assessment Year is irrelevant.

2. The person who owns the building need not also own the land under it. (You can own a building on leased land and still be charged under HP.)

3. House property income is taxable in the hands of the beneficial owner (not necessarily the legal/registered owner).

4. Registration of the property is NOT compulsory for taxing HP income — even an unregistered owner who is in possession and enjoying ownership benefits is taxable.

Worked example

### Example 1

Example 1: Mr. A owns a factory building (with appurtenant parking land) and lets it out. Rent is taxable under House Property — building income + appurtenant land are covered.

Example 2: Mr. A owns 2 acres of vacant land (no building) and lets it out as a parking lot. Income is taxable under Other Sources (or PGBP if parking is his business) — NOT under House Property.

Example 3: Mr. X has paid full consideration and taken possession of a flat from a builder, but the sale deed is not yet registered. Income from letting out the flat is taxable in Mr. X's hands as beneficial owner — registration is not required.

⚠️ Common exam mistakes

Treating income from vacant land as 'House Property' income — it must go to Other Sources / PGBP.
Insisting on a registered sale deed to tax HP income — beneficial ownership is enough.
Forgetting that ownership in the Previous Year (not Assessment Year) is the test.

Bare-Act text Section 22 · Income-tax Act, 1961 · click to expand

Section 22: The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head 'Income from house property'.

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Conditions for Chargeability of House Property Income [Sec 22]

Worked example

⚠️ Common exam mistakes