PremiumIncome tax department prescribes some relaxation to the property owner on one's let out property. So, while filing the income tax return (ITR) one needs to use the income tax calculator properly as one's gross rental income is total annual rent minus municipal taxes being paid in that financial year. Apart from this, the property owner is eligible for 30 per cent standard deduction on the gross rental income too.
Speaking on the income tax calculation rules applied on rental income Mumbai-based tax and investment expert Balwant Jain said, "As per the income tax act, total annual rent is not considered as rental income of the property owner. Gross annual rental income, as per the law is net rent of the let out property minus total municipal taxes paid by the property owner."
On standard deduction that property owner can claim on one's rental income Balwant Jain said, "Income tax department allows up to 30 per cent standard deduction on one's gross rental income. This standard deduction can be claimed by the property owner for renovation or maintenance of the property."
Elaborating upon how one can claim standard deduction on one's rental income from a let out property SEBI registered tax and investment expert Jitendra Solanki said, "While claiming standard deduction on rental income, owner of the let out property will have to produce the voucher for establishing one's expenses on house repair or maintenance. If the property owner has taken loan (either from bank or from any individual) for house repair or loan for the let out property, the owner is eligible for claiming the tax paid on loan repayment in standard deduction." However, he maintained that one can't claim more than 30 per cent of one's gross rental income for standard deduction.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!