A house property could be your home, an office, a shop, a building or some land attached to the building like a parking lot. All types of properties are taxed under the head ‘Income from house property’ in the ITR.
1. Self-Occupied House Property
A self-occupied house property is used for one’s own residential purposes. This house may be occupied by the taxpayer’s family – parents and/or spouse and children. A vacant house property is considered as self-occupied for the purpose of Income Tax.
If more than one self-occupied house property is owned by the taxpayer, only one is considered and treated as a self-occupied property and the remaining are assumed to be let out. The choice of which property to choose as self-occupied is up to the taxpayer.
2. Let Out House Property
A house property which is rented for the whole or a part of the year is considered a let out house property for income tax purposes
Conditions for chargeability of income under house property [Section 22]
- Property should consist of any building or land appurtenant thereto.
- Building Includes – Residential Buildings, factory Buildings, offices, shops, go-downs and other commercial premises.
- Land appurtenant Means land connected with the building e.g. garden, garage etc.
- Assessee must be the owner of the property
- Owner is the person entitled to receive income from house property.
- Ownership includes deemed Ownership.
- He must be the owner of the house property during the previous year.
- Use of property
- The Property may be used for any purpose but should not be used for Business/ Profession carried by the owner.
- The income earned by an assessee engaged in the business of letting out of property on rent would be taxable as business income.
- Property held as stock in trade
- Annual Value of house property which is held as Stock-in-trade of business will be charged under the head “Income from house property”