No tax on notional rent: Good news for property owners
New Delhi, Feb 2: The interim Budget 2019 proposed to bring down tax liability because two properties will be treated as self-occupied. Finance Minister Piyush Goyal has relaxed tax rules and proposed that from fiscal year 2020, two properties will be considered self-occupied and, thus, won't attract tax.
"Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children's education, care of parents etc., I am proposing to exempt levy of income tax on notional rent on a second self-occupied house," said the finance minister in his Budget speech on Friday.
Currently, only one property is considered 'self-occupied' whether you own a single property or more than one. The other properties are considered let-out or deemed to be let-out and tax has to be paid on their annual values even if they remain vacant for the entire year and the taxpayer makes no gains.
The annual value is the potential rent of a property if it was rented out. To calculate it, you need to consider the higher of the standard rent if the property lies under the jurisdiction of Rent Control Legislation or rent based on the municipal value of the property or the rent equivalent to the rent received on other similar properties in the locality.