Income/ Loss from House Property- Deduction u/s 24 A

As per the Income Tax Act, income/loss from a house property has to be considered for calculation of income tax. Calculation of income/ loss from house property is covered under section 24 A.  The said income/loss comes under the head 'Income from House Property'. While computing income/loss  from house, the assessee can make certain deductions from the net annual value of the property.  Two separate calculations are prescribed for 1. house property that  is let out and 2. house property which is self -occupied.  In this connection please note that a cap of Rs. 2,00,000 has been introduced against loss from House Property from FY 2017-18 (AY 2018-19).

The method of calculation of the “ Net Annual Value of a Property’ is covered in the article  ‘Income from House Property’ u/s 22 of IT Act 1961

A.    Income from House Property -House Property that is let out

For the purpose of arriving income/loss under the head 'Income from House Property' the permissible deductions from the net  annual value  are:

a) A sum equal to 30% of the net annual value. 
b) Interest on borrowed capital, if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the house property. 

During the same financial year, the loss under the head is permitted to be set off against the salary income. Loss relating to previous Assessment year(s) brought forward to the current financial year cannot be set off against salary income.  Such loss from house property brought forward from previous year can be set off against income under the head ‘Income from House Property’ in subsequent financial years up to a maximum of eight Assessment Years. 

B.    Income from House Property- House Property that is self-occupied/kept vacant 

In this case, maximum deduction allowable in respect of interest on borrowed capital u/s 24 is ` 
a.    Rs. 2,00,000/-, if the capital is borrowed on or after 01.04.1999 for the purpose of acquisition/ construction of the house property. Maximum deduction allowable is Rs. 30,000/- if the capital was borrowed before 01.04.1999 for purchase, construction, repairs or renovation of house property.
b.    Rs. 30,000/-  if the capital is borrowed for any other purpose (e.g. if the capital is borrowed for reconstruction, repairs or renovation of a house property). 

Whether interest prior to the year of completion eligible for deduction?  

Interest for the period prior to the year of completion of construction/acquisition 

1.    Can be claimed as deduction in five equal installments beginning with the previous year in which the property is acquired or constructed. 
2.    The total of such deduction in a year under section 24 (b) shall be restricted to Rs.30,000/- or Rs.2,00,000/- as mentioned above.