TL Self Occupied HP

Self Occupied House Property

Self-Occupied House Property [Sec. 23(2)(a)]

Meaning

As per sec. 23(2)(a), a house property shall be termed as self occupied property where such property or part thereof:

is in the occupation of the owner for the purposes of his own residence;

is not actually let out during the whole or any part of the previous year; and

no other benefit there from is derived by the owner.

Treatment
The annual value of such house or part of the house shall be taken to be nil .

If an assessee occupies more than one house property as self-occupied, he is allowed to treat only one house as self-occupied at his option. The remaining self-occupied house properties shall be treated as 'Deemed to be let out'.

Notes

Benefit u/s 23(2)(a) cannot be claimed by a company and firm.

When the assessee occupies his house but not in the capacity of owner then benefit under this section cannot be claimed.

Such option may be changed every year without any permission.

Computation of taxable income of self-occupied property
Net annual value of self-occupied property shall be taken as nil. As a consequence, deduction u/s 24(a) (standard deduction) shall also be nil. Interest on loan u/s 24(b) shall be allowed, subject to certain ceiling.

Net Annual value

Net Annual value of one self-occupied house property, at the choice of the assessee, is taken as nil . He can choose that house property as self-occupied through which tax liability can be reduced.

Interest on loan u/s 24(b)

Interest on loan taken for construction, acquisition, repair, renovation or extension is allowed according to the following table:

Conditions	Maximum Interest allowed in aggregate
Where loan is taken on or after 1/4/99 and following conditions are satisfied - Loan is utilized for construction or acquisition of house property on or after 1-4-1999; Such construction or acquisition is completed within 3 years from the end of the financial year in which the capital was borrowed; and The lender certifies that such interest is payable in respect of the loan used for the acquisition or construction of the house or as refinance of the earlier loan outstanding (principal amount) taken for the acquisition or construction of the house.	Rs.150000
In any other case	Rs.30000
Taxpoint : In any case, deduction in respect of interest on loan on self-occupied property cannot exceed Rs.150000 in a year.

Calculation and deduction of interest for the period of pre and post construction, acquisition, etc. is same as in case of let out house property.