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The homeowner and his tax

The homeowner and his tax

Suresh borrowed money from the bank to fund his home purchase in Nagpur last year. He has been living with his family in the house. Let”s see how income from property is calculated.

Suresh made an interest payment of Rs.2,16,000 this year and spent Rs.10,000 on repairs. He paid the municipality Rs.8,000 in property taxes.

Suresh”s income from house property is zero because he has been living in this house throughout the year. Section 24 of the Income Tax Act lets Suresh claim a maximum deduction of Rs.2,00,000.

Suresh makes a loss on this house property as calculated below.

Gross Annual Value0
Less: Property Taxes0
Net annual value0
Less: Interest on money borrowed-2,00,000
(Loss) on house property-2,00,000

This loss can be deducted from Suresh”s income from other heads for the year.

Note: Since the gross annual value of a self-occupied house is zero, claiming the deduction on home loan interest will result in a loss from house property. This loss can be adjusted against your income from other heads.

The homeowner and his tax

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