Loss from rental property

Against let out property, interest can be adjusted without any limit but set off loss is limited to 2 lacs. Any excess above 2 lacs will be carried forward.

Hi,

You can set off only Rs. 2 Lakhs against Income from other heads. However, the loss above Rs. 2 Lakh will have to be carried forward to future years (Up to 8 Years) and set off against any future income from House Property.

Below is the calculation as per the inputs provided by you:

Gross Annual Value (i.e Rental Income) - 2,40,000

Less: Property Tax Paid - NIL

Net Annual Value - 2,40,000

Less: 30% Standard Deduction on Net Annual Value - 72,000

Less: Interest on Housing Loan - 6,00,000

Net Loss from House Property - 4,32,000

Now, out of this Loss of Rs. 4.32 Lakhs, 2 Lakhs will be set off in current year and Balance Rs. 2.32 Lakhs (4.32 less 2) should be carried forward up to 8 Assessment Years and set off against Income from House Property, if any, earned in any of the next 8 Years

It will be set off according to the rental income. Might be it get setoff before 8 A.Y.

Hi,

You may claim full 6 lacs as interest deduction. The law has only limited the amount of loss which can be set off against other income in one year. You can claim any amount of interest on rental property against property income however after such set off, if any loss remains, It can be set off maximum upto 2 lacs against other income and remaining, if any, has to be carried forward. This is the new law.

Further, the loss should not be divided equally. The loss can be set off only upto 2 lacs each year against other income. Balance shall be carrier forward.

Thanks

Damini

Hi,

You can set it off only when there is income. The amount to be set off is the Actual Income or Carried Forward Loss whichever is lower.

If there is carried forward loss of multiple years, then it will be set off on FIFO basis (Oldest Carried Forward Loss is set off first)

Hi

The interest deduction is provided without any limit, but house property loss upto Rs. 2 lacs can only be carried forward.

In your case, you can carry forward Rs. 2 lacs as house property loss and set off Rs. 2.32 lacs with any other income.

The loss shall be carried forward to next year and can be set off with future house property incomes. If there are losses in succeeding years also, set off shall be done on FIFO basis. Loss can be carried forward for 8 years.

Hi,

Roughly your taxable income from house Property before interest deduction would be 168000 and after claiming interest amount of 6 lacs it would be loss of 432000 and as per newly amended section 71, you can set off house Property loss maximum upto INR 2 lacs and house property loss over and above the 2 lacs will be carried forward to next 8 years.

Hence, out of total loss of 4.32 lacs, you can set off 2 lacs this year and remaining 2.32 lacs will be carried forward to the next year.

No it won't be divided equally, the whole 2.32 lacs will be carried forward to next year and next year again this loss of 2.32 lacs along with any other loss of over and above 2 lacs will be carried forward.

Suppose after 5 years your interest potion comes down to 1 lacs, and your house Property income is 2.5 lacs, then you can use carry forward loss of 3.5 lacs to make house Property income as nil and set off the remaining 2 lacs with other income.

Hope, it clarifies your doubt. In case, you are not clear, please feel free to take a phone consultation.

In subsequent years also treatment of interest deduction and set off and carried forward of loss will be same. Firstly current year income and current year loss will be set off and if there is positive balance it will be set off with past year losses. There is no bar on the loss amount. The only limit is 8 years carry forward.

Carried forward amount to be set off from house property income of current year and balance to be carried forward again.

The loss can be carried forward to future years and can be set off with any future house property incomes.Losses can be carried forward for 8 years.

Not necessary to divide it equally over the years. Claim to the maximum limit every year and the maximum carry forward is 8 years. You may exhaust this even before 8 years,