House property problems

1. INCOME FROM HOUSE PROPERTY
Dr. NGPASC
COIMBATORE | INDIA
Dr. N.G.P. ARTS AND SCIENCE COLLEGE
(An Autonomous Institution, Affiliated to Bharathiar University, Coimbatore)
Approved by Government of Tamil Nadu and Accredited by NAAC with 'A' Grade (2nd Cycle)
Dr. N.G.P.- Kalapatti Road, Coimbatore-641048, Tamil Nadu, India
Web: www.drngpasc.ac.in | Email: info@drngpasc.ac.in | Phone: +91-422-2369100

2. Dr. NGPASC
COIMBATORE | INDIA
Pre - Construction period interest
Period starting from the
date of borrowing and
ending on march 31st
immediately preceding to
the year of completion of
construction / acquisition

3. Dr. NGPASC
COIMBATORE | INDIA
Pre - Construction period interest
Loan Taken -1.4.2014
Construction
completed – 1.7.2016
Pre-construction period =
1.4.2014 to 31.3.2016

4. Dr. NGPASC
COIMBATORE | INDIA
Pre - Construction period interest
1/5th of pre-
construction period
interest is allowed
for deduction

5. Dr. NGPASC
COIMBATORE | INDIA
Example 1
Calculate ARV from the particulars given below
MRV- 60000 p.a. FRV -66000 p.a
Standard Rent is 69000 p.a. Actual Rent is 7000 p.m.
a) House was vacant for full year during the previous year 2019-
2020
b) House was vacant for two months during the previous year
2019-2020
c) Actual rent of the house is 4000 p.m. and was vacant for two
months.

6. Dr. NGPASC
COIMBATORE | INDIA
Calculation of ARV
As the house property was vacant for full
year during previous year 2019-2020 hence
its ARV is nil.

7. Dr. NGPASC
COIMBATORE | INDIA
Calculation of ARV
Particulars ₹ ₹
MRV 60000
FRV 66000
w.e is higher 66000
Standard Rent 69000
w.e is less is ERV 66000
Actual Rent (7000*12=84000) 84000
w.e. is higher 84000
(-) Vacancy (7000*2) 14000
Annual Rental Value 70000

8. Dr. NGPASC
COIMBATORE | INDIA
Calculation of ARV
Particulars ₹ ₹
MRV 60000
FRV 66000
w.e is higher 66000
Standard Rent 69000
w.e is less is ERV 66000
Actual Rent (4000*12=48000) 48000
w.e. is higher 66000
(-) Vacancy (4000*2) 8000
Annual Rental Value 58000

9. Dr. NGPASC
COIMBATORE | INDIA
Example 2
Mr.P owns a house at Chandigarh. This house property is used in
following manner:
1/3rd of the house is used for own business,
1/3rd of the house is used for own residence,
1/3rd of the house is used by a tenant to whom it is let out @ Rs.3000
p.m. and it was self occupied for one month during the previous year. The
municipal rental value of the house is Rs.96,000 p.a on which municipality
levies 10% tax. These taxes are paid by the occupants. Compute net
annual value of the house property for the previous year 2019-20 if each
parties is an independent unit.

10. Dr. NGPASC
COIMBATORE | INDIA
Calculation of ARV
Unit A 1/3rd portion used for
own business - NAV is NIL

11. Dr. NGPASC
COIMBATORE | INDIA
Calculation of ARV
Unit B 1/3rd portion used for
own residence - NAV is NIL

12. Dr. NGPASC
COIMBATORE | INDIA
Calculation of ARV
Unit C 1/3rd let out for 11
months & self occupied for 1
month.

13. Dr. NGPASC
COIMBATORE | INDIA
Calculation of NAV
Particulars ₹ ₹
Actual rent received for 11 months 33000
MRV (96,000 × 1/3) 32000
Whichever is higher is ARV i.e., 33000
Less: Municipal taxes paid by the owner Nil
Net Annual Value of let out portion 33000
Less: Std deductions - 30% of NAV 9900
Income from let out house 23100
(In the above case rent is taken for 11 months as actual rent
realized is only for 11 months)

14. Dr. NGPASC
COIMBATORE | INDIA
Example 3
Calculate the income from the house property from the information given
below:
Municipal Rental Value Rs. 18,000
Rent received during the year Rs. 24,000
Municipal Taxes (50% paid by tenant) Rs. 1,800 p.a
Expenses incurred on repairs
(a) By owner Rs. 3,000
(b) By tenant Rs. 3,000
Collection charges Rs. 1,000
Date of completion of house 1-6-2000

15. Dr. NGPASC
COIMBATORE | INDIA
Calculation of NAV
Particulars ₹ ₹
MRV 18000
Actual rent received 24000
Whichever is higher is ARV i.e., 24000
Less: Municipal taxes paid by the owner 900
Net Annual Value of let out portion 23100
Less: Standard Deduction 30% of NAV 6930
Income from House property 16170

16. Dr. NGPASC
COIMBATORE | INDIA
Example 4
From the particulars given below compute total income of Mr. P.
Aggarwal for the assessment year 2020-2021. The house was
completed on 1.9.14
A. Self occupied house
Municipal Rental Value 12000 p.a.
Fair rental Value 18000 p.a.
Municipal taxes 1200 p.a.
Ground rent 500 p.a.
Interest on loan 10000 p.a.

17. Dr. NGPASC
COIMBATORE | INDIA
Example 4
B. Let out House
Municipal Rental Value 24000 p.a.
Actual rental received 30000 p.a.
Municipal taxes 2400 p.a.
Interest on loan for the previous years
2019-20 10000
2018-19 15000
2017-18 15000
2016-17 15000
2015-16 15000
2014-15 15000
2013-14 15000
Ground rent 2400
Fire insurance premium 2000
C. Income from other sources 50000

18. Dr. NGPASC
COIMBATORE | INDIA
Calculation of NAV
Particulars ₹ ₹
NAV NIL
Less: Deductions
Interest on loan 10000
Loss from HP (10000)

19. Dr. NGPASC
COIMBATORE | INDIA
Calculation of NAV
Particulars ₹ ₹
MRV 24000
Actual rent received 30000
Whichever is higher is ARV i.e., 30000
Less: Municipal taxes paid by the owner 2400
Net Annual Value of let out portion 27600
Less: Standard Deduction 30% of NAV 8280
Interest on loan 10000 18280
Income from let out house 9320

20. Dr. NGPASC
COIMBATORE | INDIA
Calculation of NAV
Particulars ₹ ₹
Income from other sources 50000

21. Dr. NGPASC
COIMBATORE | INDIA
Calculation of NAV
Particulars ₹ ₹
A. Loss from Self Occupied House (10000)
B. Income from Let out House 9320
(680)
C. Income from other sources 50000
Total income 49320

22. Dr. NGPASC
COIMBATORE | INDIA
Example 5
Mr. Vimal built a residential house at Hyderabad and for the completion
of the house he took a loan of 20 lakhs from a bank as under:
1. On 1.5.2013 8,00,000 @10%
2. On 1.11.2014 8,00,000 @9%
3. On 1.1.2016 4,00,000 @8%
House was completed in October 2016and since then it is occupied for the
residential purpose of his family. He repaid 4,00,000 to the bank on 1st
December 2019 and bank adjusted this amount against the loan of 2013.
Determine the amount of deductions admissible u/s 24.

23. Dr. NGPASC
COIMBATORE | INDIA
Solution
House completed in October 2016 so interest from the date of
borrowing up to 31st March 2016 (i.e., prior to previous year in which
the house was completed)
So, interest from 1.5.2013 to 31.3.2016 shall be treated as pre-
construction.
1.5.2013 – 31.3.2016 (8,00,000 @ 10% p.a - 2 years 11 months) - 2,33,333
1.11.2014 – 31.3.2016 (8,00,000 @ 9% p.a - 1 year 5 months) - 1,02,000
1.1.2016 – 31.3.2016 (4,00,000 @ 8% p.a - 3 months) - 8,000
Total interest for pre-construction period 3,43,333

24. Dr. NGPASC
COIMBATORE | INDIA
Particulars ₹ ₹
NAV of self occupied NIL
Deductions u/s 24
Interest for current year 2019-20
On 4,00,000 @10% for full year 40,000
On 4,00,000 @10% for 8 months (up to 30.11.2019) 26,667 66,667
On 8,00,000 @ 9% 72,000
On 4,00,000 @8% 32,000
1,70,667
Interest for pre-construction period (1/5th of 3,43,333) 68,667
2,39,334
But restricted to 2,00,000 2,00,000
Loss from self occupied house 2,00,000

25. Dr. NGPASC
COIMBATORE | INDIA
Example 6
Mr. B owns a house property at cochin. It consists of 3 independent units and
information about the property is given below:
Unit 1: Own residence
Unit 2: Let out
Unit 3: Own business
MRV – 1,20,000 p.a FRV – 1,32,000 p.a
Standard rent -1,08,000 p.a Rent – 3,500 p.a
Unrealized rent for 3 months Repairs – 10,000
Insurance – 2,000
Interest on money borrowed for the construction of property – 96,000
Municipal taxes – 14,400 Date of completion - 1-11-2014

26. Dr. NGPASC
COIMBATORE | INDIA
Particulars ₹ ₹
Unit 1: Own residence
Annual value Nil
Interest on loan 96000 * 1/3 32,000
Loss form self-occupied unit (32000)
Unit 2: Let out
MRV 1,20,000 * 1/3 40,000
FRV 1,32,000 * 1/3 44,000
w.e is higher 44,000
Standard rent 1,08,000 * 1/3 36,000
w.e is less is ERV 36,000
Actual Rent- unrealized rent (42000-10500) 31,500
w.e is higher is ARV 36,000
Less: Municipal taxes (14400*1/3) 4,800
NAV 31,200
Less: Deductions u/s 24
Standard deductions – 30% of NAV 9,360
Interest on loan 96000*1/3 32,000 41,360
Loss from let out unit (10,160)

27. Dr. NGPASC
COIMBATORE | INDIA
Particulars ₹ ₹
Unit 3: Own business
Annual value Nil
Loss under the head house property (42,160)

28. Dr. NGPASC
COIMBATORE | INDIA
Example 7
Following are the particulars of 2 let out houses of Mr. Ashu Aggarwal
Particulars ₹ ₹
Municipal valuation 4,20,000 3,50,000
FRV 3,60,000 3,80,000
SR 4,40,000 3,20,000
AR 4,80,000 4,20,000
Unrealized rent 40,000 35,000
Vacancy 2 months 2 months
Municipal Taxes
Actually Paid 12,000 25,000
Due but not paid 30,000 10,000
Repairs 10,000 8,000
Insurance premium 12,000 6,000
Other expenses 8,000 10,000
Interest on money borrowed for the purchase of house - 60,000
Intermine Mr. Ashu’s income from house property

29. Dr. NGPASC
COIMBATORE | INDIA
House A Particulars ₹ ₹
MRV 4,20,000
FRV 3,60,000
w.e is higher 4,20,000
SR 4,40,000
w.e less is ERV 4,20,000
AR – Unrealized rent (4,80,000-40,000) 4,40,000
w.e is higher 4,40,000
(-) Vacancy 80,000
GAV 3,60,000
(-) Municipal taxes 12,000
NAV 3,48,000
(-) Deductions u/s 24
Standard Deductions 30% of NAV 1,04,400
Income from let out house 2,43,600

30. Dr. NGPASC
COIMBATORE | INDIA
House B Particulars ₹ ₹
MRV 3,50,000
FRV 3,80,000
w.e is higher 3,80,000
SR 3,20,000
w.e less is ERV 3,20,000
AR – Unrealized rent (4,20,000-35,000) 3,85,000
w.e is higher 3,85,000
(-) Vacancy 70,000
GAV 3,15,000
(-) Municipal taxes 25,000
NAV 2,90,000
(-) Deductions u/s 24
Standard Deductions 30% of NAV 1,17,000
Interest on borrowed money 60,000 1,77,000
Income from let out house 1,13,000

31. Dr. NGPASC
COIMBATORE | INDIA
Particulars ₹ ₹
House property Income
House A 2,43,600
House B 1,13,000
Total HP Income 3,56,600

32. Dr. NGPASC
COIMBATORE | INDIA
Example 8
Mr. X the owner of two houses, occupies one for his own residence and the other
he lets to a tenant at a monthly rent of 500. the municipal valuation of the house
occupied is 2600 and of the other is 5200. the municipal taxes of the two
amounted to 600. The other expenses in respect of the two houses are as
follows:
Insurance premium for both houses 1200
Annual charge in respect of the house occupied 300
Ground rent for the house let 100
Repairs of the house occupied 700
Interest on loan taken to repair the two houses 400
Mr. X also had income from other sources amounting to 20,000 during the year.
Calculate Mr. X’s income from house property and total income.

33. Dr. NGPASC
COIMBATORE | INDIA
Particulars ₹ ₹
Self occupied house
NAV Nil
(-) Deductions
Interest on loan 400*1/3 133
Loss from self-occupied house (133)

34. Dr. NGPASC
COIMBATORE | INDIA
Particulars ₹ ₹
Let out house
MRV 5200
AR 6000
w.e is higher 6000
(-) Municipal taxes 600*1/3 400
NAV 5600
(-) Deductions
Standard deductions 30% 1680
Interest on loan 400 *2/3 267
Income from let out house 3653

35. Dr. NGPASC
COIMBATORE | INDIA
Particulars ₹ ₹
Total Income
Self occupied house (133)
Let out Income 3653
Income from house property 3520
Income from other sources 20000
Total Income 23520

36. Dr. NGPASC
COIMBATORE | INDIA
Example 9
Compute income from house property of Mr. Anil and Mr. Sunil for the year
ending on 31.3.2020, from the information given below:
i) Mr. Anil and Mr. Sunil are brothers and they have inherited the house
property from their father with equal share.
ii) Rent realizable from the property is 27000 p.a.
iii) Municipal Taxes (to be borne by the land lord) are 9000 p.a.
iv) The property is on leasehold land and the annual lease rent is 3000
v) Rent collector is paid 100 per month
vi) Property was mortgaged by taking a loan of 50000 @10% p.a. for the
purpose of partnership business. The loan was taken on 1st October 2017.
vii) One of the flats in the building fetching monthly rent of 500 was vacant for
two months.

37. Dr. NGPASC
COIMBATORE | INDIA
Particulars ₹ ₹
Actual rent 27000
(-) Municipal taxes 9000
18000
(-) Vacancy 1000
NAV 17000
(-) Deductions
Standard deductions 30% 5100
Income from house property 11900

38. Dr. NGPASC
COIMBATORE | INDIA

39. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HP
Particulars ₹ ₹
MRV 10000
Actual rent received (1000*12) 12000
Whichever is higher is ARV i.e., 12000
Less: Municipal taxes (10000*10%) 1000
Conveyance tax (300/2) 150 1150
Net Annual Value of let out portion 10850
Less: Standard Deduction 30% of NAV 3255
Income from 1st Flat 7595
Flat ISolution

40. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HP
Particulars ₹ ₹
MRV 10000
Actual rent received (1000*12) 12000
Whichever is higher is ARV i.e., 12000
Less: Municipal taxes (10000*10%) 1000
Conveyance tax (300/2) 150 1150
Net Annual Value of let out portion 10850
Less: Standard Deduction 30% of NAV 3255
Interest on loan 4200 7455
Income from 1st Flat 3395
Flat
II
Solution

41. Dr. NGPASC
COIMBATORE | INDIA

42. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HP
Particulars ₹ ₹
Actual rent received (800*12) 9600
Less: Unrealized rent 2000
7600
Less: Municipal taxes 1800
Net Annual Value 5800
Less: Standard Deduction 30% of NAV 1740
Interest on loan 1000 2740
Income from House Property 3060
Solution

43. Dr. NGPASC
COIMBATORE | INDIA

44. Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HP
Particulars ₹ ₹
MRV 24000
Actual rent received 30000
Whichever is higher is ARV i.e., 30000
Less: Municipal taxes 2400
Net Annual Value 27600
Less: i) Standard Deduction 30% of NAV 8280
ii) Interest on loan
Current Year 2019-2020 10000
1/5 of Pre construction Interest (2013-2015)
(15000*2=30000) (30000*1/5)
6000 24280
Income from House Property 3320
Solution

45. Dr. NGPASC
COIMBATORE | INDIA

46. Particulars ₹ ₹
MRV 15000
FRV 18000
w.e is higher 18000
SR 18000
w.e less is ERV 18000
AR 19200
w.e is higher 19200
(-) Municipal taxes 1000
NAV 18200
(-) Deductions u/s 24
Standard Deductions 30% of NAV 5460
Income from house property 12740
Deemed Income
Unrealized rent recovered (14000-4000 = 10000) (16000-12000=4000) 10000
(-) Standard Deductions (30%) 3000 7000
Total HP Income 19740
Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HPSolution

47. Dr. NGPASC
COIMBATORE | INDIA

48. Particulars ₹ ₹
House A : Self Occupied House
NAV NIL
(-) Deductions u/s 24
Interest on loan 15000
Loss on self occupied house (15000)
House B: Let out House
MRV as ARV 30000
Less: Municipal taxes 1500
Net Annual Value 28500
Less: Deductions u/s 24
i) Standard Deduction 30% of NAV 8550
ii) Interest on loan 18000 26550
Income from let out house property 1950Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HPSolution Option A

49. Particulars ₹ ₹
House B : Self Occupied House
NAV NIL
(-) Deductions u/s 24
Interest on loan 18000
Loss on self occupied house (18000)
House A: Let out House
MRV as ARV 24000
Less: Municipal taxes 1000
Net Annual Value 23000
Less: Deductions u/s 24
i) Standard Deduction 30% of NAV 6900
ii) Interest on loan 15000 21900
Income from let out house property 1100Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HPSolution Option B

50. Dr. NGPASC
COIMBATORE | INDIA
Solution
Option A
House A – (15000)
House B – 1950
Option B
House A – 1100
House B – (18000)
Hence Option B is better

51. Dr. NGPASC
COIMBATORE | INDIA

52. Particulars ₹ ₹
House A : Self Occupied House
NAV NIL
(-) Deductions u/s 24
Interest on loan restricted to 36000 30000
Loss on self occupied house (30000)
Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HPSolution

53. Particulars ₹ ₹
House B: Let out House
MRV 160000
FRV 180000
w.e is higher 180000
SR 150000
w.e is less 150000
AR (172000-6000) 166000
w.e is higher is ARV 166000
Less: Municipal taxes 16000
Net Annual Value 150000
Less: Deductions u/s 24
i) Standard Deduction 30% of NAV 45000
ii) Interest on loan 48000 93000
Income from let out house property 57000
Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HPSolution

54. Particulars ₹ ₹
House A : Self Occupied House (30000)
House B : Let out House 57000
Income from house property 27000
Dr. NGPASC
COIMBATORE | INDIA
Calculation of Income from HPSolution

55. 55