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How To Calculate House Property Income for ITR 1

Updated on: 10 Aug, 2023 11:49 AM

Do you own a house? Or do you earn income from rent?

If yes, then you need to take care while selecting which ITR form to use while filing your return.

As income from house property needs to be considered in your ITR. Failing to which can invite troubles for you.

There are basically 2 situations for any house owner. Either you own one house property or more than one.

In case, you own 1 house property then you need to file return using ITR 1. And if you own more than one, then file return through ITR 2.

Today we'll show you how to calculate your income from house property for ITR 1.

What is ITR 1?

ITR 1 or Sahaj form is for resident individuals who earn salary income, income from 1 house property, income from other sources excluding lottery winning & total income is up to ?50 lacs.

You can further refer for various ITR forms to our guide.

Now, let us show you how income from house is calculated in ITR 1.

What is ITR 1?

In the above image, when you select Type of House Property, 2 options will be given.

  • Self Occupied
  • Let Out

We'll discuss both the options one-by-one.

Self Occupied House Property

You must be wondering, how income can be earned from the house in which you live.

This will be beneficial for you, if you have borrowed capital to construct or purchase house.

Sec 24 of IT Act allows you to take deduction of interest payable on the borrowed capital. In case of Self occupied, the deduction shall not exceed ?2,00,000.

Therefore, every value in above table will be Nil. Except Interest Payable on Borrowed Capital.

You can claim this as a loss from house property & set it off from all other heads of income.

Let Out

This option is taken when you are earning rental income from house property.

  • Gross Rent Received/ Receivable/ Letable Value

The gross value of rent is determined by using value of Expected Rent (ER) & Actual Rent Received/ Receivable (ARR).

Expected Rent: It is basically rent that can be earned by letting out the property. It is higher of, Fair Rent & Municipal Rent. ER cannot exceed value of Standard Rent.

Now, how to determine gross value? Simply follow this rule:

Condition Gross Annual Value will be
If ARR exceeds ER ARR
If ARR is less than ER, due to vacancy ARR
If ARR is less than ER, other than vacancy ER
  • Tax Paid to Local Authorities
    This amount represents any Municipal Taxes paid by you.
    It is important to note, only tax paid by you & not by tenant including reimbursement (if any) will be allowed as deduction.
    Also, deduction will be given only for tax actually paid during P.Y. It does not matter if tax amount belong to any previous year.
  • Annual Value
    This is nothing but net of Gross Value & Local Tax Paid.
  • 30% of Annual Value
    This is a standard deduction given to every assessee earning rental income from house property.
  • Interest Payable on Borrowed Capital
    If you have taken any loan for the property against which you are earning rental income. Then you can claim that interest amount as deduction irrespective of any limit. However, the limit for set off shall not exceed ?2,00,000 irrespective of the type of house property.
  • Income Chargeable Under the Head House Property
    This amount represents your income/ loss from house property in ITR 1.

To Conclude

Calculation of income from house property is an easy task given you are aware of provisions.

We hope our blog was able to solve your queries related to house property income for ITR 1.

Still if you need any help, just get in touch with our eCAs.

Also, you can file your ITR online for FREE with Tax2Win. Simply visit our page. Happy Filing ????

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.