Residential Property Losses: You can run across a loss from residential property when declaring your income. Income from residential property is classified as “rental income” under the Indian Income Tax Act, and it can be lucrative or unprofitable. If the taxpayer makes a loss in this area of income, the loss can be adjusted against other income earned in the same fiscal year.

 

 

---

Are you looking for 3bhk flat in seawoods?

---

 

Residential Property Losses- In a self-occupied home, the house property loss set-off is still not possible. There is, however, a provision to carry it forward for up to eight years. In a fiscal year, losses on real estate are deducted from other sources of revenue.

There’s also a good chance the assessee didn’t have any other sources of income that year. You can deduct such losses in later assessment years in such instances. The parts that follow will provide everything else you need to know about house property losses:

 

• Loss of residential property due to a variety of factors
• Calculation of property losses in a home
• How are losses on real estate considered for tax purposes?
• Deductions for tax purposes on house loans

 

Residential Property Losses- House property losses include a variety of causes.

The owner suffers such losses mostly as a result of seeking a deduction for interest on borrowed money. When you use your money to buy or build a house, you won’t get any of these deductions. If you borrow money to buy or build a house, however, the maximum deduction is for the interest you pay.

As a result, the two most prevalent causes of house property loss are:

 

Residential Property Losses-Self-occupied property losses

Self-occupied homes can be used as a dwelling by the taxpayer and their family. A property that is unoccupied is also considered self-occupied. If you owned more than one self-occupied property before FY 2019-20, you could only count one of them as self-occupied, and the others were presumed rental. Furthermore, the taxpayer has the option of keeping one or more properties as self-occupied.

The government has now modified the regulations for claiming tax advantages, making it easier to deduct the loss on a home. A homeowner can claim two homes as self-occupied and one as rented starting in FY 2019-20. This is a fantastic way to save money on taxes while maintaining your current lifestyle.

The property’s Gross Annual Value (GAV) will be zero if you own it and reside in it. Because you occupy it, you are not making any money from renting it or paying off your mortgage. According to Section 24 of the IT Act, the taxes you pay and the interest you pay on your home loan will result in a loss on your home. The maximum interest deduction for a house loan is Rs 1.5 lakhs.

 

Residential Property Losses-Loss resulting from a rented property

In the event of rented homes, the GAV will not be zero. As a result, if the claimed deductions exceed this amount, the let-out property will be considered a loss of home property. Similarly, you may select whether to use inherited houses from parents and grandparents as self-occupied or as a let-out based on their usage.

 

How to figure out how much money you’ve lost on your house

• To begin, you must first establish the property’s GAV, which is zero for self-occupied dwellings. If the property is for rent, the GAV will equal the rent received.
• Second, you must deduct any taxes that have been charged on the property. If you pay property taxes, you can deduct them from your GAV under the IT Act.
• Finally, you must determine the Net Annual Value (NAV). The NAV is equal to the GAV less the property tax.
• Fourth, you must deduct 30% of NAV, which is deductible under section 24 of the Internal Revenue Code. Other expenses, such as house upkeep and re-painting, are not eligible for tax relief above the 30% limit.
• Fifth, you must deduct interest paid on your house loan during the year you took out the loan, which is also deductible under Section 24.
• Finally, the value you acquire is your house property income or loss, which is taxed at a slab rate. Because the GAV on the self-occupied property is zero, you will lose money if you claim the home loan interest deduction. The IT Act, on the other hand, allows for a set-off of residential property losses against income from other sources.

 

Property loss set off for taxation is handled differently.

You can use it for house property loss set-off if you have a loss from your home but generate money from any of the other five categories of income: salary/house property/business or profession/capital gains/other sources.

For such losses, the Finance Act of 2017 made a change, which will take effect in 2018-19. A taxpayer’s loss from residential property that can be deducted from other income is limited to Rs 2 lakhs every financial year. To set off the remaining loss, you can carry it forward to the following fiscal year.

It’s important to remember, though, that a set-off for a loss on a house is conceivable with any other income head in the same fiscal year. If you carry the loss forward to the next year, you can only use it to offset income from House Property for that tax year.

Furthermore, the taxpayer will not be able to carry the balance loss forward for another eight years. If the taxpayer has income from home property in any of the years, the tax will have to be taken off in that year.

 

 

Mortgage interest deductions

You can claim up to Rs 2 lakh in tax savings on your home loan interest if you reside in your home. You can reap the same benefits if the residence is vacant. If you rent out the property, you can deduct all of your loan interest. The interest deduction limit is up to Rs 30,000 under certain conditions:

You took out a house loan on or after April 1, 1999, and did not complete the acquisition or construction of the property until five years after the end of the same fiscal year. The five-year period begins on the final day of the evaluation year.

Previously, the duration was three years in FY 2026-17, but in Budget 2016, it was increased to five years. A taxpayer should also keep in mind that they may only claim an interest deduction after the construction is completed at the start of the assessment year.

 

Taking a tax deduction for a loan taken out before the house was finished to cover a loss on the property:

The taxpayer cannot claim the interest on the loan as a deduction until the property is completed. The time period in question is known as the pre-construction phase. During this time, the taxpayer can deduct interest paid on a loan in five successive tax instalments. It starts with the year when the house is completed.

 

Repayment of principal deduction

The entire limit of Section 80C can be reduced by up to Rs 1,50,000. It’s only accessible if you’ve been approved for a home loan to buy or build a new home. You also have five years from the time you take control of the property to resell it. If you do, the deduction will be reversed and your income will be reduced.

 

What additional costs linked to the transfer are authorised as losses from house property deductions?

Stamp duty and registration fees are only two of the numerous payments that qualify for a Section 80C deduction. Interest on loans or mortgages, transfer taxes, and commission fees are all allowed charges. This year, you can deduct these expenses, but the total amount cannot exceed Rs 1.5 lakh.

 

Sections 80EE and 80EEA deductions

With Section 80EE of the Income Tax Act, a new section was created. The tax advantage will enable homeowners with one property on the loan’s sanctioned date with up to Rs 50,000 in deductions under Section 80EE.

The IT Act created Section 80 EEA to let taxpayers to deduct interest on loans if they own more than one property. Between April 1, 2019 and March 31, 2020, the taxpayer should have taken out such a loan. However, such advantages cannot be combined with deductions under section 80EE.

 

---

You’re looking for Buy Homes in Kharghar we have the best Buy Homes in Kharghar Like Ready to Move & Nearby possession: https://navimumbaihouses.com/property/search/buy/kharghar/

 

If you want daily property update details please follow us onFacebook Page / YouTube Channel / Twitter