Housing property helps save on taxes, multiply gains
house, it is considered an agriculture income and does not fall under the tax net.
Let out property (LOP)
A scenario where an individual enjoys a fixed income from a property in the form of rent, it is known as let out property. The annual value of the property is calculated through the following steps:
* Find out the expected rent from the property by comparing the rents of similar kinds of property in different areas and use whichever is higher
* Calculate the actual rent received in a year
* Take the amount which is higher (from steps 1 & 2)
* Calculate the amount lost while the place is vacant in a financial year
* The difference between 3 & 4 is the annual value of the property, known as the Gross Annual Value (GAV)
* The net annual value of the property can be calculated by subtracting municipal tax from the gross annual value Deemed to be let out property (DLOP)
If a taxpayer owns more than one residential property, he can treat only one of those as self occupied while others will be treated as a ‘deemed to be let out property’, the benefit for which can be claimed under Sec 23(2) on the taxpayer’s choice. The taxpayer is liable to pay tax on these properties after calculating the GAV which is calculated the same way as in case of a Let Out Property. However, the rent calculated will be the standard rent which has been calculated as per the
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