Property | Property | Property | Property | Property |
Property 1 | ₹10,000 | ₹8,000 | ₹7,000 | ₹8,000 |
Property 2 | ₹12,000 | ₹9,000 | ₹8,000 | ₹9,000 |
Property 3 | ₹15,000 | ₹12,000 | ₹10,000 | ₹12,000 |
- Determine the fair rent for each property. This is the rent that the property could be expected to fetch in the open market if it were let out. You can estimate the fair rent by considering factors such as the size, location, and condition of the property, as well as the current rental rates for similar properties in the area.
- Calculate the standard rent for each property. This is the rent that is fixed for the property under the Rent Control Act, if applicable. If the property is not subject to rent control, the standard rent is equal to the fair rent.
- Calculate the municipal value for each property. This is the value of the property as determined by the local municipal corporation.
- Compare the fair rent, standard rent, and municipal value for each property. The lower of the fair rent and standard rent is considered the notional rent for the property.
- Select the two properties with the highest notional rents as your self-occupied properties. The remaining properties will be treated as deemed to be let out and you will be taxed on the notional rent for these properties.
If you own more than two residential properties for personal use, you can only consider up to two properties as self-occupied for tax purposes. The remaining properties will be treated as deemed to be let out and you will be taxed on the notional rent for these properties.
To make the selection of which properties to consider self-occupied, you can follow these steps:
- Determine the fair rent for each property. This is the rent that the property could be expected to fetch in the open market if it were let out. You can estimate the fair rent by considering factors such as the size, location, and condition of the property, as well as the current rental rates for similar properties in the area.
- Calculate the standard rent for each property. This is the rent that is fixed for the property under the Rent Control Act, if applicable. If the property is not subject to rent control, the standard rent is equal to the fair rent.
- Calculate the municipal value for each property. This is the value of the property as determined by the local municipal corporation.
- Compare the fair rent, standard rent, and municipal value for each property. The lower of the fair rent and standard rent is considered the notional rent for the property.
- Select the two properties with the highest notional rents as your self-occupied properties. The remaining properties will be treated as deemed to be let out and you will be taxed on the notional rent for these properties.
In this example, Property 3 would be considered the self-occupied property with the highest notional rent, and Property 2 would be considered the self-occupied property with the second-highest notional rent. Property 1 would be treated as a deemed to be let out property.
It is important to note that the selection of self-occupied properties is irrevocable once you file your income tax return. Therefore, you should carefully consider all of the factors involved before making your selection.