Taxability of Income from House Property in India (FY 2024-25): Old vs New Tax Regime, Key Deductions & Changes
Income from house property is a key aspect of Indian income tax. With the new tax regime under Section 115BAC (now the default for most taxpayers), it’s essential to evaluate your tax breaks and obligations every year. Use this comprehensive, user-friendly guide for FY 2024-25 to make informed choices for your property income and minimize your taxes.
What Counts as ‘Income from House Property’?
- Includes any rental income (actual or notional) from buildings or land attached, whether residential or commercial.
- Taxed in the hands of the legal or deemed owner, regardless of whether it’s self-occupied, let out, or deemed let-out.
Self-occupied property generates no taxable income unless more than two properties are claimed as self-occupied. Excess self-occupied homes are deemed let-out properties.
Tax Deductions and Provisions (FY 2024-25)
| Section / Deduction | Old Tax Regime | New Tax Regime (115BAC) |
|---|---|---|
| Standard Deduction [Section 24(a)] |
30% of Net Annual Value (NAV) for let-out or deemed let-out; up to 2 self-occupied homes exempt from notional rent. | 30% of NAV for let-out/deemed let-out property. Not available for self-occupied homes. |
| Interest on Home Loan [Section 24(b)] |
Up to ₹2 lakh for self-occupied; full interest allowed for let-out (within income limit). | Not allowed for self-occupied. Only rental property interest eligible. |
| Principal Repayment [Section 80C] |
Deduction up to ₹1.5 lakh (with other items), subject to holding property for 5 years. | Not allowed |
| Pre-construction Interest | Claimable in 5 equal annual instalments after completion year. | Not allowed |
| Additional Deduction 80EE/80EEA | Claimable by eligible first-time buyers within sanctioned limits. | Not allowed |
| Set-off Loss (Other Income Heads) | Allowed up to ₹2 lakh per year. | Not allowed |
| Carry Forward Loss | Allowed up to 8 assessment years (if return filed on time). | Allowed up to 8 assessment years (if return filed on time). |
Historic and Recent Changes in House Property Tax
| Financial Year | Key Change |
|---|---|
| FY 2001-02 | Introduction of ₹1.5 lakh cap for home loan interest (Section 24b). |
| FY 2014-15 | Section 80EE: More deduction for first-time homebuyers. |
| FY 2019-20 | Notional rent on second self-occupied property exempted. |
| FY 2020-21 | New Tax Regime (115BAC) introduced. |
| FY 2023-24 | New regime set as default for AY 2024-25 onwards. |
| FY 2024-25 | 30% deduction continued, but no self-occupied interest deduction in new regime. |
House Property Loss: Set-off and Carry Forward Rules
- Old Regime: Set-off loss against other income allowed up to ₹2 lakh per year; any unabsorbed loss can be carried forward for 8 assessment years.
- New Regime: Inter-head set-off not allowed; carry forward permitted only against house property income—only if return is filed by due date.
- Key Point: Carry forward of loss is not permitted for belated returns, as per Section 139(1).
Example: Self-Occupied Home Loan in FY 2024-25
- Old Regime: Deduction for interest up to ₹2 lakh/year, principal under Section 80C. Favors taxpayers with big EMIs.
- New Regime: No deduction for self-occupied property (principal or interest). Plan accordingly.
How to Choose: Old vs New Regime?
| Scenario | Recommended in FY 2024-25 |
|---|---|
| Self-occupied with high home loan | Old Regime (maximum deductions) |
| Let-out property with loan | Old regime (wider deduction/set-off); new regime for low deductions/income |
| No loan/low rental income | New Regime (less hassle, often lower tax) |
Compliance Checklist for Taxpayers
- Default regime from AY 2024-25: New regime. You must opt for old regime every year (if salaried) or once for lifetime (if self-employed) to retain deductions.
- File returns on time for carry-forward of losses and all property income.
- Rent arrears/unrealized rent are taxed on receipt—with 30% standard deduction.
- Declare all properties. Remember, NOT more than 2 can be self-occupied and get full exemption.
- Maintain all loan & ownership/bill records for verification and e-filing needs.
Maximize your house property tax benefits by analyzing both regimes for your situation each year and never miss a due date for tax filing!
Conclusion
Optimal house property tax planning helps you save tax and avoid future hassles. The choice between old and new regime depends on your individual home loan and property scenario. Compare both options before filing your ITR for FY 2024-25 and consult your tax expert for large sums or complex cases.
Take timely action for the best tax outcome!