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MFM-MHRDM III Semester. The Annual Value of a Property consisting of buildings or lands appurtenant thereto of which the assessee is the owner is chargeable.

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Presentation on theme: "MFM-MHRDM III Semester. The Annual Value of a Property consisting of buildings or lands appurtenant thereto of which the assessee is the owner is chargeable."— Presentation transcript:

1 MFM-MHRDM III Semester

2 The Annual Value of a Property consisting of buildings or lands appurtenant thereto of which the assessee is the owner is chargeable to tax under the head Income from House PropertySec 22

3 The Property should consist of any buildings or lands appurtenant thereto – rental income of vacant property not included. The assessee should be the owner of the property The property should not be used for own business whose profits are chargeable to tax Company dealing in properties

4 Residential Commercial/office Music hall Cinema hall Vacant plot Factory Store/warehouse

5 Owner includes deemed owner What if rent is NOT received by owner? Ownership of building v/s land Income from subletting

6 Transfer to spouse or minor child – An arrangement to live apart – Married minor daughter – Wife buys house with cash gifted Holder of impartible estate Property help as member of co-op society/company/AOP Property acquired under power of attorney transaction – u/s 53A of Transfer of Property Act Right in bldg acqd u/s 269UA(f) – Not LT 12 yrs

7 Income is determined as follows: Rs. Gross annual value …. Less Municipal taxes …. Net annual Value …. Less Deduction U/S 24 - Standard deduction …. -Interest on borrowed capital …. Income from House Property ….

8 Step I Find out reasonable expected rent of the property Step II Find out rent actually received/ receivable [ exclude unrealised rent] Step III Select the higher of the above Step IV Compute loss due to vacancy Step V Gross annual value = Step III – Step IV

9 Rent received or receivable does not include rent of the period for which the property remains vacant. It is calculated as- Rent of the P.Y. for which the property is available for letting out …. Less: unrealised rent( vacated or defaulted) …. Rent received /receivable before deducting loss due to vacancy …. Conditions for deducting unrealised rent

10 Unrealized rent or rent of vacant period is deductible only if certain conditions are fulfilled- 1.The tenancy is bonafide 2.The defaulting tenant has vacated or steps have been taken to get him vacated 3. The defaulting tenant is not in occupation of any other property of the assessee. 4. Proper legal proceedings against the tenant is initiated

11 Municipal Taxes are allowed as deduction only if : 1.The taxes are borne by the owner 2.Taxes are actually paid by him during the P.Y. Gross Annual Value - Municipal Taxes= Net Annual Value

12 a)Standard deduction [Sec 24(a)] 30% of net annual value is allowed b)Interest on borrowed capital [Sec 24(b)]

13 30 percent of Net Annual Value is deductible irrespective of any expenditure Incurred by the tax payer

14 Interest on borrowed capital is allowed as deduction If capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the property Can be claimed on accrual basis Brokerage or commission on loan is not allowed as deduction Interest on borrowed capital is allowed as deduction without any ceiling in case of let out property Interest on loan rollover allowed

15 Deduction is allowed in 5 equal installments pre-construction period means the date commencing on the date of borrowing and ending on : March 31 st immediately prior to the date of completion of construction or date of acquisition OR Date of repayment of loan whichever is earlier

16 A property occupied for own business purposes More than one property is occupied for own residential purposes 1 house treated as self occupied Rest deemed to be let out

17 The Annual Value of Self occupied House property is taken as NIL if- Used for residential purposes The property is not let out during any part of the year No other benefit is derived

18 Income is determined as follows: Rs. Gross annual value Nil Less Municipal taxes Nil Net annual Value Nil Less Deduction U/S 24 - Standard deduction Nil -Interest on borrowed capital Deductible Income from House Property XXXX

19 Used throughout PY for own residential purposes and not let out or put to any other use Unable to occupy property because employment/business/profession of owner is in some other place Where a part of property (being independent residential unit) is occupied and remaining part let out Property let out for part of year and self occupied in remaining part

20 Max amount is Rs.1,50,000 Capital borrowed on or after 1 st April,1999 for acquiring or constructing a property The acquisition should be complete within 3 years from end of FY in which capital is borrowed If capital is borrowed for extension or renovation,deduction is Rs.30,000 Capital borrowed before for purchase, extension or renovation is Rs.30,000

21 Thankyou


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