“Rent” of every type of building, whether the same has been rented for residential or commercial purposes, is offered to tax as ‘Income from House Property’.
Properties are divided into two categories:
a. Self- Occupied
Case 1: When you own one house
Suppose you own only one house and you are residing in the same, in such a case, you are not earning any rental income from such house and therefore, taxable value for this house should be Nil.
Case 2: When you own more than one house
If you own more than one house, in such a situation, you can only treat one house as occupied for own purposes and the other house property will be assumed to be let-out and income tax at a notional rental income would be applicable. Notional rental income is usually the expected from renting of that property.
b. Let- Out
A let- out house property is one that is occupied by tenants, supported by a rent agreement. In such situation, the actual rent received/ receivable from the tenants under the rent agreement on an annual basis is brought to tax and is termed the annual value of said property.
Read: Available deductions from House Property income.