“Income from House Property” is one of the five heads of income under the Income Tax Act, 1961. It covers rental income earned from buildings or land appurtenant thereto, whether residential or commercial. Even if the property is not let out but is capable of yielding income (like a second self-occupied house), it may be taxed under this head, depending on the situation.

Conditions for Taxability under
For an income to be taxed under this head, the following conditions must be met:
✅ The property should consist of buildings or land appurtenant thereto.
✅ The assessee must be the owner of the property.
✅ The property should not be used by the owner for the purpose of their own business or profession.

Classification of House Property
✔️ Self-Occupied Property (SOP):
Only one property can be claimed as self-occupied.
Its Annual Value = NIL.
Interest on home loan deductible up to ₹2,00,000 u/s 24(b).

✔️ Let-Out Property (LOP):
Actually let out during the year.
Rental income taxable after deducting municipal taxes and standard deductions.

✔️ Deemed to be Let-Out Property:
If you own more than one property and none is let out, only one can be SOP and the rest are deemed let-out.
Taxed on notional rent basis.

Computation of Income from House Property

Step 1: Calculate Gross Annual Value (GAV):
For let-out properties: Higher of expected rent or actual rent.
For self-occupied: GAV is NIL.
Step 2: Deduct Municipal Taxes paid by owner.
Step 3: Arrive at Net Annual Value (NAV).
Step 4: Deduct the following u/s 24:
🔺 Standard Deduction: 30% of NAV.
🔺 Interest on Borrowed Capital:
➡️ Self-Occupied: Max ₹2,00,000
➡️ Let-Out: Entire interest amount allowable (No upper cap)
➡️ Pre-construction interest: Deductible in 5 equal installments over 5 years starting from the year of completion.

Key Tax Benefits
👉 Limit on Self-Occupied Properties Retained:
Taxpayers can still claim 2 properties as self-occupied (as introduced earlier via Finance Act 2019).
Annual value remains NIL for both.
👉 No Change in Deduction Limits:
Standard Deduction (30%) and Interest limits (₹2 lakh for SOP) remain unchanged.
👉 Continued Benefit for Affordable Housing Loans:
Additional deduction u/s 80EEA of ₹1.5 lakh extended for loans sanctioned till 31st March 2026 for first-time home buyers (subject to conditions).