Answer

1. F

   Facts

   Most home loan holders don't know that their loss from house property (excess of home loan interest over rental income) can reduce their taxable salary, but only up to ₹2L per year in the old regime. The remaining loss is carried forward for 8 years and can only be set off against future house property income.

2. P

   Provisions and law

   • Sec 22(1)(b) (old 24(b))
   • Sec 109 (old 71)
   • Sec 110 (old 71B)
   • Sec 263(1) (old 139(1))
3. A

   Analysis

   How house property loss works in practice: Let-out flat: annual rent ₹3L. Home loan interest: ₹5L. Municipal tax: ₹20K. Computation: Gross rent ₹3L − 30% standard deduction ₹90K − municipal tax ₹20K = Net rental income ₹1.9L. Less: home loan interest ₹5L. Net house property income: ₹1.9L − ₹5L = LOSS of ₹3.1L. Set off against salary: maximum ₹2L. Remaining ₹1.1L: carried forward to next 8 years (can only be set off against future HP income). Self-occupied property with home loan: No rental income. Home loan interest: ₹4L. Sec 22(1)(b), Income-tax Act 2025 (old Sec 24(b)) deduction: capped at ₹2L for self-occupied. So maximum loss = ₹2L. Set off against salary: ₹2L. Tax saving at 30%: ₹60,000/year. This is why salaried people with home loans in old regime benefit significantly. Two properties, which is self-occupied? Finance Act 2019: both properties can be declared self-occupied (earlier only one).

4. C

   Conclusion

   1. 1List all properties: self-occupied, let-out, deemed let-out
   2. 2For let-out: compute annual rental income (actual rent, not just received, includes advances)
   3. 3Apply 30% standard deduction and municipal tax paid to arrive at net rental income
   4. 4Compute home loan interest from bank certificate (full year)
   5. 5Net house property income = (rental − 30% SD − muni tax) − home loan interest
   6. 6If negative (loss): set off up to ₹2L against salary (old regime only)

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