- 19-Apr-2025
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Rental income from multiple properties is taxed under the Income from House Property head in India. The tax treatment remains similar whether you own one property or several properties, but owning multiple properties may involve additional considerations for deductions and tax planning.
Each property, regardless of how many you own, is treated individually for tax purposes. The gross annual value (GAV) of each property is considered, and after applying specific deductions, the net taxable income is calculated.
The Gross Annual Value (GAV) of a property is the actual rent received or the fair rent (whichever is higher) that can be charged for the property in the open market.
For properties that are vacant or not rented out, the income is calculated based on the expected rental value.
If the property is self-occupied (i.e., you live in it), the GAV is zero, meaning no rent is earned, but there are still deductions available.
Section 24 of the Income Tax Act allows the following deductions to reduce the taxable rental income:
Example: If you pay ₹10,000 as municipal tax for a rental property, this can be deducted from the rental income.
Note: The deductions under Section 24 are only allowed for properties that are rented out or deemed to be rented out. Self-occupied properties are treated differently (explained below).
Multiple Properties: If you own multiple properties, the tax calculation is done for each property individually. The gross annual value (GAV) of each property is added together, and the total rental income is calculated after applying deductions for each property.
Example 1 (for two rental properties):
Total rental income from both properties = ₹45,000 (Property 1) + ₹73,000 (Property 2) = ₹1,18,000, which will be taxed according to your income tax slab.
For self-occupied properties, there is a different rule. You cannot claim rental income, as you do not receive rent. However, you can still claim the standard deduction of 30% on the annual value (which is considered as zero) and the interest deduction on home loan under Section 24(b) up to ₹2 lakh.
In the case of multiple self-occupied properties, only two properties can be claimed as self-occupied, and the rest will be treated as deemed to be let out for tax purposes. This means that rental income will be attributed to the additional properties and taxed accordingly.
Example 2 (for self-occupied and rental properties):
If you own more than two properties and do not rent out all of them, the third property onwards will be considered as deemed to be let out.
You will be taxed on the annual value of these properties as if they were rented out, and the rental income will be calculated based on the fair rental value of the property.
The deductions for interest on the home loan and the standard 30% deduction will still be available for such properties.
Mr. Raj owns three properties:
For Property 1 (Rented Out):
For Property 2 (Rented Out):
For Property 3 (Self-Occupied):
Total Taxable Rental Income:
₹50,000 (Property 1) + ₹43,000 (Property 2) = ₹93,000.
The taxable rental income from Mr. Raj's two rental properties is ₹93,000, and this will be added to his total income for tax purposes.
Rental income from multiple properties is taxed under the head Income from House Property, and the process for calculating tax remains the same for each property. You can claim deductions for municipal taxes, home loan interest, and a standard deduction of 30% on net rental income. If you have more than two self-occupied properties, the additional properties are treated as deemed to be let out and taxed accordingly. Proper tax planning and claiming deductions can reduce the overall tax liability on rental income.
Answer By Law4u Team
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