Income Tax return filing: How to maximise income from your property
Standard deduction of 30 per cent on the rent received along with all the municipal taxes being paid by the house owner is exempted from income tax in the rental income bracket.
Having a property let out on rent doesn't mean all the rent received is taxable. The government of India provides some exemption that a house property owner must know before filing his or her Income Tax Return (ITR). Tax and investment experts say that standard deduction of 30 per cent on the rent received after deducting all the municipal taxes being paid by the house owner is exempted from income tax in the rental income bracket. After all kinds of deductions, if the rental income is less than Rs 2.4 lakh, then there is no need to go for the TDS (Tax Deduction at Source).
Elaborating upon the rental income and deduction available on it Balwant Jain, a Mumbai-based tax and investment expert told Zee Business, "If a house owner has paid any municipal tax, that has to be deducted from your annual rent. After deducting the municipal taxes, the government of India gives 30 per cent standard deduction. In fact, if you have taken housing loan for other property in which you are living in, then the interest paid throughout the year would also get deducted from the rental income with a cap of up to Rs 2 lakh."
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The Mumbai-based tax and investment expert went on to add that if somebody has paid more than Rs 2 lakh as home loan interest after deducting the rental income from the EMI paid under a home loan, the rest of the losses would be adjusted in coming 8 years.
Standing in sync with Jitendra Solanki, a SEBI registered tax and investment expert told, "After all deduction, if the rental income is Rs 2,40,000 or less, then there is no need to go for TDS deduction this year as the Modi government has increased TDS limit on rental income from Rs 1,80,000 to Rs 2,40,000 in the interim budget presented by Piyush Goyal." Solanki further added that from the current year, there is no tax being levied on the house property owner if he or she has two houses and one is let out without renting. "In the interim budget 2019, tax on the second let out house property has been fully exempted," said Solanki.