# Income from House Property — Computation Format

Income from House Property is computed separately for Self-Occupied Property (SOP) and Let-Out Property (LOP) / Deemed Let-Out Property (DLOP).

## Self-Occupied Property (SOP)

Gross Annual Value (GAV) = NIL
No Municipal Tax deduction (since NAV is nil)
No 30% standard deduction (since NAV is nil)
Only Interest u/s 24(b) is deductible — maximum ₹2,00,000 (or ₹30,000 in certain cases)
Result is always a loss (because of interest deduction with nil GAV)

## Let-Out / Deemed Let-Out Property (LOP / DLOP)

Particulars	₹
Gross Annual Value (GAV) — higher of: Expected Rent OR Actual Rent Received	xxx
Less: Municipal Taxes (only if PAID by owner during the year)	(xxx)
Net Annual Value (NAV)	xxx
Less: Deductions u/s 24:
(a) Standard Deduction — 30% of NAV	(xxx)
(b) Interest on borrowed capital (on due basis)	(xxx)
Income from House Property	xxx

## Key Rules

1. Municipal taxes — Deductible only if (i) borne by the owner, AND (ii) actually paid during the previous year. Unpaid municipal taxes are NOT deductible.

2. 30% standard deduction — Computed on NAV (not on GAV). No vouchers/bills needed.

3. Interest u/s 24(b) — Allowed on due/accrual basis, irrespective of payment.

4. Pre-construction interest — Allowed in 5 equal installments starting from the year of completion.

5. For DLOP, the deemed rent (Expected Rent) becomes the GAV.

Worked example

### Example 1

Example — Let-Out Property

Mr. X owns a let-out house in Delhi. Actual rent received ₹3,00,000. Municipal Value ₹2,40,000, Fair Rent ₹2,80,000, Standard Rent ₹2,60,000. Municipal taxes ₹20,000 paid by owner. Interest on housing loan ₹1,50,000.

Step 1 — Expected Rent: Higher of MV (₹2,40,000) or FR (₹2,80,000) = ₹2,80,000, restricted to Standard Rent ₹2,60,000. So Expected Rent = ₹2,60,000.

Step 2 — GAV: Higher of Expected Rent (₹2,60,000) or Actual Rent (₹3,00,000) = ₹3,00,000.

Particulars	₹
GAV	3,00,000
Less: Municipal Taxes (paid)	(20,000)
NAV	2,80,000
Less: 30% Standard Deduction	(84,000)
Less: Interest u/s 24(b)	(1,50,000)
Income from House Property	46,000

### Example 2

Example — Self-Occupied Property

Mr. Y lives in his own house. Interest on housing loan (taken in 2018 for purchase) ₹1,80,000.

Particulars	₹
GAV (SOP)	NIL
NAV	NIL
Less: Interest u/s 24(b)	(1,80,000)
Loss from House Property	(1,80,000)

This loss can be set off against other heads (max ₹2,00,000 per year for inter-head set-off).

⚠️ Common exam mistakes

Deducting municipal taxes that are outstanding — only paid taxes are deductible.
Computing 30% standard deduction on GAV instead of NAV.
Claiming interest on cash basis — interest is deductible on accrual/due basis even if unpaid.
Treating municipal taxes paid by the tenant as deductible — only owner-paid taxes qualify.
Allowing 30% standard deduction on SOP — since NAV is nil, no 30% deduction is available; only interest is allowed.

Bare-Act text Sections 22, 23 & 24 · Income-tax Act, 1961 · click to expand

Section 23: For the purposes of section 22, the annual value of any property shall be deemed to be — (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property is let and the actual rent received is in excess of the sum referred to in clause (a), the amount so received. Section 24: Income chargeable under the head 'Income from house property' shall be computed after making the following deductions — (a) a sum equal to thirty per cent of the annual value; (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital.

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Income from House Property - Computation Format

Worked example

⚠️ Common exam mistakes