Should you make money from renting your house, that income is subject to taxes. The good news is, though—you are not liable for taxes on the whole rent you get. You can lower your taxable income by taking advantage of the Income Tax Act’s rental property deductions. Let’s learn how these deductions operate and how you might legally save money.
What are deductions from rental property?
While figuring your taxes, rental property deductions are particular expenses you can deduct from your rental income. These deductions reduce your whole tax load, saving you money. Should you rent out a house, flat, or even a commercial space, you should be aware of these advantages.
Typical India Rental Property Deductions
The following are the principal deductions you could be entitled to:
- One standard deduction—30% of net annual value
Your net rental income is deducted by the government flatly thirty percent for repairs, maintenance, etc. You are not required to present any receipts or documentation.
For instance, you immediately get a ₹90,000 deduction if your annual rental income—after municipal taxes—is ₹3,00,000. - Local Taxes Paid
Before computing the 30% deduction, you can write off municipal or property taxes paid during the year from your gross rent. - Section 24(b) – Home Loan Interest
Should you have a home loan when purchasing the rented property, the interest paid can be deducted. Unlike self-occupied property, rental property has no upper limit on interest. - Absence of Loss
Should your property be vacant for a portion of the year, the rent for that period is not included. You pay taxes just on the real rent you get. - Fixing and Maintenance
Although the 30% standard deduction covers overall maintenance, major repairs like structural repairs or renovations cannot be claimed separately unless the property is used for business purposes.
Extra Advice for Property Owners
- As documentation, keep bank statements and rent receipts.
- If yearly rent is more than ₹1,00,000, gather PAN for the tenant.
- Enter rental income in your ITR under “Income from House Property.”
- File returns on time to help prevent penalties.
Last Notes
You have to show your rent from a property on your tax return. But don’t panic; India’s tax rules provide reasonable relief via several rental property deductions. These deductions lighten your financial load and lower your taxable income. Thus, keep your records ready, know them well, and make wise use of the advantages you have at hand.
