Tax rules: Claiming vacant house as self-occupied in income tax return

I own a house which is self-occupied. My wife is a homemaker and stays with me with no income except interest on bank deposits. She also owns a small house in a town about 50 km away from where we stay. It has been lying vacant for the full previous year. Can she claim her house as self-occupied while filing her ITR, or is it required to be considered as deemed let out and notional rental income from house property to be calculated accordingly and offered for tax?

As per the income tax laws, a person can claim a maximum of two houses as self-occupied. Suppose he owns and occupies more than two houses for his occupation or occupation of his relatives on which no rent is received. In that case, he has to select any two of such houses as self-occupied and the rest of the house properties are treated as deemed to have been let out. If he is deemed to have been let out of a property, the taxpayer has to offer notional rent for taxation even though he has not received any rent on such property. Please note that notional rent is not the same as nominal rent. It is the market rent which the property is expected to fetch if let out.

Tax Rule Update: To Qualify a Property as Self-Occupied

To claim any property as self-occupied, the taxpayer doesn’t need to stay there. What is required is that the property is not let out. So, if you reserve any property for your self-occupation or is actually occupied by any other person on which no rent is received, the same can be treated as self-occupied property. Please note that the rule of two maximum self-occupied properties is available for each taxpayer and not for a family as a unit. Since the sole house owned by your wife was not let out during the previous year, it can be claimed as self-occupied while filing her ITR.

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Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and @jainbalwant on his X handle.

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