Income From House Property Calculation
There are a lot of people who want to analyze the net income that emanates from their house property. Here, we will explore the different steps and methods that must be followed in order to calculate the net income that will be generated from house property.
The first step is to calculate the annual value of your house. On the annual income that is generated, you have to make a couple of deductions such that you can understand the final value of your home. The deductions that you have to make are as follows. The first deduction is statutory deduction. You can subtract 30 percent of the net value from the income of your house as it is considered to be standard deduction from the home income.
Further, if you have bought your home on loans from different banks, you can make further deductions as the interest which you pay on the loan would be used for deductions. Such deduction is known as interest on borrowed capital.
After you have made both these deductions, you arrive at the final value of the house and this can be used as the income from house property. However, the question that you must be having is how to arrive at the net annual value of your home. We will guide you through this process as well.
Basically, the annual value of the house would be the sum of money which could be considered to be the ideal sum for which the house may be put on rent for a year. In order to come to the conclusion about the justified annual value, you have to consider a lot of different factors.
You would have a gross annual value of your house that can be determined from the rent that you give for staying at the house or if it is your own home, it is an estimate of the net rent which you would charge if you let your house. So, this value is the net gross value. Now, when you are staying at the house, you definitely have to pay a lot of taxes to the government authorities like municipal tax, water tax, and sewage tax and so on. All these taxes must be added together and the net amount must be subtracted from the gross value. This will generate the annual value of the house.
Hence, this was the method of calculating the net annual value. As discussed above, you would be required to make the two deductions from the net annual value of your home and then you would be able to reach the net income from your house property which would be taxable.
Hence, it is mandatory that you have a clear understanding of the details of the different house property calculation. You should be willing to explore the details thoroughly. Seek help from experts if required and learn the intricate details of the calculations. Once you would have a thorough understanding of these details, you would be able to accurately measure the net income which is taxable from your house property.
You have to be thorough about the type of taxes that you pay. Sometimes, people seek help from financial experts in order to obtain such reports. It is mandatory that you pay the right dutiful taxes and this is the reason, we would recommend you to check the determination of house income thoroughly.