Let-Out Property Income Calculator

Start with Gross Annual Value (GAV), which is the higher of actual rent received or expected rent (based on municipal value/fair rent, capped by standard rent). Deduct municipal taxes actually paid by the owner during the year to get Net Annual Value (NAV). From NAV, deduct 30% standard deduction under Section 24(a), and home loan interest under Section 24(b) without any cap for let-out. The result is income from house property. Example: rent Rs 3,60,000, municipal tax Rs 12,000, home loan interest Rs 4,50,000. NAV = Rs 3,48,000. Standard deduction Rs 1,04,400. After interest, loss of Rs 2,06,400 (capped at Rs 2 lakh for cross-head set-off).

Yes, but only if actually paid by the owner during the financial year, and not just accrued or pending. Property tax, water tax and sewerage charges paid to the municipal corporation count. Maintenance charges paid to the housing society don't qualify here because they're not municipal taxes. Take rent of Rs 3 lakh, municipal tax of Rs 15,000 paid in February: gross annual value Rs 3 lakh, less Rs 15,000 = NAV Rs 2,85,000. The 30% standard deduction is then computed on Rs 2,85,000, not Rs 3 lakh. Keep municipal tax receipts; they're often asked for during scrutiny. Tax paid by tenant on owner's behalf doesn't count unless reimbursed.

Section 24(a) gives a flat 30% deduction on Net Annual Value (rent minus municipal taxes). It's a notional allowance for repairs, maintenance and collection charges, regardless of actual spending. So even if you spent only Rs 5,000 on repairs and your NAV is Rs 5 lakh, you still get Rs 1,50,000 as standard deduction. Conversely, if you spent Rs 2 lakh on actual repairs, you can't claim the actual; you're stuck with the 30%. Don't confuse this with the Rs 75,000 standard deduction in salary head; that's a separate provision under Section 16(ia). Both are available simultaneously to a salaried person with rental income, under either tax regime.

Yes, under Section 24(b), home loan interest on a let-out property is fully deductible without any cap, unlike the Rs 2 lakh ceiling for self-occupied property. So if your interest is Rs 6 lakh on a let-out flat, the full Rs 6 lakh reduces your house property income. However, the resulting loss after 30% standard deduction can only be set off against other heads of income up to Rs 2 lakh in the current year under Section 71(3A); the balance carries forward for 8 years against future house property income. Under the new tax regime, this interest is allowed only against rent, not for cross-head set-off.

Section 23 has a specific provision (clause c) for vacancy. If the property was let out during the year but remained vacant for some period due to genuine non-availability of tenant despite reasonable effort, the actual rent received can be taken as the annual value, even if it's lower than the expected rent. The vacancy must be involuntary and documented (broker emails, listing screenshots, advertisements, prior tenant departure record). If the property was deliberately kept vacant by the owner for personal use part of the year, deemed rental value calculations apply. From AY 2020-21, taxpayers can declare two houses as self-occupied without notional rent.

Strictly speaking, society maintenance charges are not deductible from rent under Section 23 or 24, because the law allows only municipal taxes to come off the gross rent and a flat 30% standard deduction thereafter. However, in many lease agreements, the rent itself excludes maintenance, with the tenant paying society dues directly; in such cases your gross annual value reflects only the actual rent you receive, not the maintenance portion. If you receive rent inclusive of maintenance and pay it onward to the society, the gross figure is what's reported, and the 30% standard deduction is your only relief. Structure rent agreements thoughtfully to optimise this.

When a property is jointly owned, rental income is taxed in each owner's hands in proportion to their ownership share, as recorded in the sale deed and reflected in their respective fund contributions. Each co-owner separately computes their share of NAV, applies their share of municipal taxes, claims 30% standard deduction on their share, and deducts home loan interest paid by them. Spouse co-ownership is common: husband 60%, wife 40%, with rent of Rs 6 lakh, municipal tax Rs 20,000 and joint loan interest Rs 5 lakh. Each computes their slice. This often leads to substantial tax savings if one spouse is in a lower slab. Document contributions clearly.