House Property Income Calculator

The Three-Step Calculation

Income from a let-out house property is computed in three steps: start with Net Annual Value (rent received minus municipal taxes actually paid), subtract a flat 30% standard deduction on that NAV (regardless of your actual maintenance costs — you can't claim real expenses instead), then subtract the full home loan interest for the year. Unlike a self-occupied property, there's no cap on the interest deduction here — a large interest outgo can push this calculation into a loss.

Worked Example

₹3,00,000 annual rent, ₹20,000 municipal taxes paid, ₹1,50,000 home loan interest:

Self-Occupied Property Works Differently

This calculator is built for a let-out property, where NAV comes from actual rent. For a self-occupied property, NAV is treated as nil (no notional rent), so there's nothing to apply the 30% deduction against — but interest deduction is still allowed, capped at ₹2,00,000 per year under the old tax regime (and unavailable entirely under the new regime). Entering zero rent with a large interest figure into this tool would show an uncapped loss, which isn't the correct self-occupied treatment — use this calculator only for a property you actually rent out.

Loss Set-Off Has a Yearly Cap

If this calculation results in a loss, you can set it off against your other income (like salary) up to ₹2,00,000 in a year under the old regime — beyond that, the remaining loss carries forward for up to 8 assessment years, settable only against future house property income. Under the new regime, this set-off against other income heads is not available.

Deemed Let-Out Property: The Rule for a Second House

If you own more than one house property and don't let out the second one, tax law doesn't simply treat it as having nil income the way a single self-occupied property does. Historically, only one property (or, more recently, up to two, subject to conditions) could be claimed as self-occupied with nil annual value — any additional property you hold and don't rent out is treated as "deemed let out" and taxed on a notional rent, computed the same way this calculator computes actual rental income.

Working out the notional rent for a deemed let-out property involves comparing municipal value, fair rent, and standard rent (where rent control applies) — a more involved exercise than this calculator handles. If you hold multiple properties and aren't renting all of them out, get the deemed-let-out computation checked separately rather than assuming nil income applies to every vacant unit.

Vacancy and Unrealised Rent

If a property remains vacant for part of the year despite being available for letting, the annual value is adjusted downward for the vacancy period rather than computed on a full year's notional or expected rent. Separately, if a tenant fails to pay rent that was legitimately due and specific conditions around recovery efforts are met, that unrealised rent can be excluded from the rent figure used in this computation. Both adjustments require documentation and meeting specific conditions — this calculator assumes the rent you enter is the full amount actually received or receivable for the year, so treat a real-world vacancy or default situation as needing its own careful computation.

Comparing Let-Out vs Self-Occupied Treatment

Because the two categories are computed so differently, it helps to see them side by side rather than assume one calculator output applies to both situations:

What Counts as "Municipal Taxes Paid"

Only municipal taxes (property tax, and similar local-body levies) actually paid by the owner during the year are deductible from gross rent to arrive at Net Annual Value — not the amount that fell due, and not taxes the tenant paid directly on your behalf without reimbursement. If the tax authority bills you for multiple years at once, or you clear a backlog of previous years' dues in the current year, the deduction follows the year of actual payment, not the year the liability originally arose. Keep the payment receipt or challan, since this is one of the more commonly scrutinized figures in a house property computation.

A related point worth flagging: any portion of the property tax that a tenant might pay directly to the municipality (uncommon, but it happens in some lease structures) doesn't count as a deduction for the owner, since it wasn't the owner who bore that outgo.

Pre-Construction Interest

Interest paid on a home loan during the period before construction is completed (or before you take possession) isn't lost — it's aggregated and made deductible in five equal instalments starting from the year construction is completed, in addition to whatever interest you're paying in that year itself. This calculator only takes a single year's interest figure, so if your property was under construction, add the applicable instalment of pre-construction interest to the current year's actual interest before entering the combined figure — leaving it out will understate your deduction and overstate taxable income.

Co-Owned Properties

When a property is jointly owned and jointly financed, each co-owner reports their own share of rental income and claims their own share of the deductions — the 30% standard deduction and the loan interest — in proportion to their ownership share, not as one combined figure split arbitrarily. This means two co-owners with an equal ownership share and an equal share of the home loan would each run this calculator independently on their half of the rent and half of the interest, rather than one person entering the full property figures. Getting the ownership and loan-repayment shares clearly documented (through the sale deed and loan agreement) matters here, since it determines how the deduction is split if it's ever questioned.

Multiple Properties and the "Two Self-Occupied" Rule

A taxpayer who owns more than two properties and doesn't let any of them out can generally claim self-occupied (nil annual value) treatment for at most two of them, chosen by the taxpayer — any additional property beyond that is treated as deemed let out, taxed on notional rent as described above, regardless of whether it's actually occupied by the owner or simply kept vacant. This makes the choice of which two properties to designate as self-occupied a genuine planning decision when a taxpayer holds three or more residences: designating the properties with the highest potential notional rent as self-occupied, and letting the deemed-let-out treatment fall on a lower-value property, generally minimizes the resulting tax exposure — though this calculator doesn't run that comparison and simply computes the figures for the single let-out property you describe.

Composite Rent for Property Plus Furniture or Services

Rent that a tenant pays is sometimes bundled — a single figure covering the bare property alongside furniture, fittings, or services like maintenance staff or a security deposit's notional benefit. Only the portion attributable to the property itself is treated as house property income under this computation; a genuinely separable charge for furniture rental or services is more commonly taxed under a different income head (income from other sources, typically) rather than folded into the house property calculation this calculator performs. Where a lease agreement doesn't clearly separate the two components, this split can become a point of dispute, so a well-drafted agreement that itemizes rent for the bare property separately from any furniture or service charge makes both the tax computation and any later scrutiny considerably simpler.