New Launch - India Real Estate Report 2026.
Whether you own a self-occupied house or earn rental income from a residential property, the Income Tax Act requires you to report it appropriately while filing your Income Tax Return (ITR).
Any taxpayer who owns a property during the financial year may have to disclose it, including individuals with a self-occupied house, owners of one or more rented-out properties, co-owners of a property and taxpayers with vacant properties treated as deemed let-out under the tax rules. This is reported under the 'Income from House Property' schedule in the applicable ITR form.
Self-occupied vs rented (let-out) property
The tax treatment differs depending on whether the property is occupied by the owner or rented out. A self-occupied house is used by the owner for residential purposes and its annual value is generally considered Nil, provided applicable conditions are met, though taxpayers can still claim eligible deductions such as home loan interest. If a property has been rented out during the financial year, taxpayers must report:
- Gross rent received or receivable
- Municipal taxes paid, if any
- Net annual value
- Eligible deductions, including the standard deduction and home loan interest
If a taxpayer owns more than two houses and any additional property is not rented out, it may be treated as a deemed let-out property, requiring notional rental income to be computed and reported.
How income from house property is calculated
For a let-out property, taxable income is generally calculated through the following adjustments: Gross Annual Value (GAV) or rent received/receivable, less municipal taxes paid by the owner, giving the Net Annual Value (NAV); less a standard deduction of 30 per cent of the Net Annual Value; and less eligible deduction for interest paid on a home loan under Section 24(b).
The resulting figure is the taxable income, or loss, from house property reported in the ITR. Taxpayers must also provide details such as the property's address, nature (self-occupied or let-out), rental income, municipal taxes paid, home loan interest and co-ownership details, if applicable.
Choosing the right ITR form and avoiding common mistakes
The correct ITR form depends on the taxpayer's income profile and number of properties owned. ITR-1 can be used by eligible individuals with income from salary, one or more eligible house properties and other specified sources, subject to the form's conditions.
ITR-2 generally applies where a taxpayer does not qualify for ITR-1, including certain cases involving multiple properties or more complex income situations. Common mistakes to avoid include:
- Failing to report rental income
- Claiming incorrect home loan interest deductions
- Choosing the wrong ITR form
- Omitting property details or eligible deductions
- Incorrectly reporting jointly owned property
Keeping documents such as the home loan interest certificate, municipal tax receipts and rent agreements handy can help ensure accurate reporting and reduce the chances of discrepancies or delays in processing.
Enjoyed this update? Visit PropTech Pulse for more real estate news, investment insights and property market trends.
