Tax rules: how to declare unoccupied housing as self-occupied in the income tax return

I own a house which I am self-occupying. My wife is a housewife and lives with me with no income except interest from bank deposits. She also owns a small house in a village about 50 km from where we live. It has been vacant for the entire previous year. Can she declare her house as self-occupied while filing her income tax return or is it necessary to treat it as rented out and calculate the notional rental income from the house property accordingly and offer it for tax payment?

According to the income tax lawsA person can declare a maximum of two houses as self-occupied. Suppose he owns and occupies more than two houses for his occupation or the occupation of his relatives for which he does not receive rent. In that case, he has to select two of those houses as self-occupied and the rest of the properties in the house are treated as if they were rented out. If a property is considered to have been rented out, the taxpayer has to provide a notional rent for taxation even though he has not received any rent from that property. Please note that notional rent is not the same as nominal rent. It is the market rent that the property is expected to earn if it is rented out.

Tax Rule Update: How to Qualify a Property as Self-Occupied

To report a property as self-occupied, the taxpayer does not need to live there. What is required is that the property is not rented out. Therefore, if he reserves a property for his own occupation or it is actually occupied by another person for whom he receives no rent, the same can be considered a self-occupied property. Note that the two-maximum self-occupied properties rule applies to each taxpayer and not to a family as a unit. Since the single home owned by his wife was not rented out during the previous year, it can be reported as self-occupied when filing his tax return. ITR.

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Balwant Jain is a tax and investment expert and can be contacted at [email protected] and @jainbalwant on his X account.

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