Here is How the Tax on Income from Property Is Calculated
Oct 26, 2017 Legal Guidance
The Section 22 of Income Tax is all about taxation and income generated from house property. The house property tax includes flats, buildings, office spaces, shops, factories, farm houses, residential houses, any building, hotels or land appurtenant thereto. However, the income from an open plot of land can be charged under income from business sources or other sources but nor under the income from house property.
The person eligible to receive income from the property is termed as the owner, even if there is no registered document in his or her favour. The different types of ownership included are freehold, leasehold and deemed ownership.
Those who have multiple properties are liable to pay the tax on income from the property. An individual cannot self occupy multiple properties. It is advised that a person should self occupy that property for which he or she has to pay the highest tax or has the highest notional rent. The tax liability is only imposed on a person who is the owner of the property and not the one who acts on behalf of the owner.
As per the Income Tax department norms, it does not matter whether your property is vacant; you are still liable to pay the tax on the fair rent. So it is advisable to put the property on rent and then pay out tax rather than paying the tax without earning anything and paying tax from your pocket. The annual tax will be computed on the actual rent or the fair rent, whichever is the higher. In case, the house is partly self occupied and partly rented then the taxes can be proportionately apportioned between rented portions and self occupied portion.
Also, properties that have building or land attached to it, are liable for taxation comes under the income from house property.
The person eligible to receive income from the property is termed as the owner, even if there is no registered document in his or her favour. The different types of ownership included are freehold, leasehold and deemed ownership.
Those who have multiple properties are liable to pay the tax on income from the property. An individual cannot self occupy multiple properties. It is advised that a person should self occupy that property for which he or she has to pay the highest tax or has the highest notional rent. The tax liability is only imposed on a person who is the owner of the property and not the one who acts on behalf of the owner.
As per the Income Tax department norms, it does not matter whether your property is vacant; you are still liable to pay the tax on the fair rent. So it is advisable to put the property on rent and then pay out tax rather than paying the tax without earning anything and paying tax from your pocket. The annual tax will be computed on the actual rent or the fair rent, whichever is the higher. In case, the house is partly self occupied and partly rented then the taxes can be proportionately apportioned between rented portions and self occupied portion.
Also, properties that have building or land attached to it, are liable for taxation comes under the income from house property.
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