New Tax Rules 2025 for House property | Tax Calculation on income from House Property

Summary

The video explains key changes in property tax rules introduced in Budget 2025, including amendments to Section 23 concerning self-occupied, let-out, and deemed let-out properties. The update allows taxpayers to treat two properties as self-occupied if one remains vacant due to employment or other reasons, simplifying tax calculations. Additionally, the new tax regime provides tax exemptions for income up to ₹12 lakh and unlimited deductions on housing loan interest for rented properties. The video also highlights relevant courses for career advancement in tax and accounting fields.

Takeaways

• 😀 The Budget 2025 introduces changes to property taxation, particularly impacting house property rules and annual value assessments.
• 😀 House property tax is calculated using three key terms: self-occupied property, let-out property, and deemed let-out property for multiple properties owned.
• 😀 A property can be considered self-occupied for tax purposes if it is used by the owner as their residence or is vacant due to the owner's employment or business in another place.
• 😀 Under the new budget changes, a property owner with multiple properties can now treat both properties as self-occupied if the second property is vacant for reasons other than business or employment-related absence.
• 😀 Simplification in the budget allows owners with multiple properties to consider two of them as self-occupied without needing to meet stringent previous conditions.
• 😀 In the case of more than two properties, the remaining properties are considered deemed let-out and a notional rent is calculated for taxation purposes.
• 😀 A 30% deduction is allowed on the notional rent of deemed let-out properties, with the remaining amount being taxable.
• 😀 The amendments to property taxation rules under Section 23 of the Income Tax Act come into effect in the financial year 2024-25, applicable from the assessment year 2025-26.
• 😀 The Budget 2025 also proposes to increase the tax-free income limit to ₹12 lakh under the new tax regime, offering relief to taxpayers.
• 😀 Property owners who lease out their properties will benefit from unlimited tax deductions on housing loan interest under the new regime, making rental property management more favorable.

Q & A

What is the primary focus of the video script?

The video script focuses on recent changes in house property tax rules introduced in Budget 2025, specifically regarding the taxation of self-occupied and deemed let-out properties.

What is the significance of Section 23 in relation to house property tax?

Section 23 deals with the annual value of house properties and defines how properties are treated for tax purposes, including self-occupied, let-out, and deemed let-out properties.

How does the government define a self-occupied property?

A self-occupied property is defined as one where the owner resides personally or uses the property for their own residential purposes.

What are the conditions for a second property to be treated as self-occupied?

A second property can be treated as self-occupied if the owner is unable to occupy it due to employment, business, or professional reasons in another location, as per Section 23.

What is the new change introduced in Budget 2025 for properties held by the owner?

Budget 2025 proposes to simplify the treatment of properties, allowing a second property to be treated as self-occupied if the owner cannot occupy it due to any reason, instead of only employment or business reasons.

What happens if a person owns more than two properties?

If a person owns more than two properties, the additional properties are considered deemed let-out, and a notional rent is calculated for tax purposes, with a 30% deduction allowed before taxation.

How does the government simplify the annual value for multiple properties in the new budget?

The government has simplified the calculation by stating that if the property is used for the owner's residence or is occupied due to any reason, its annual value can be considered as nil, making it non-taxable.

What are the implications of the new rules for individuals who rent out their properties?

Individuals who rent out their properties can benefit from unlimited deductions on the interest paid on housing loans under the new tax regime, depending on the rental income.

How does the new tax regime impact income tax rates for individuals?

In the new tax regime, income up to ₹12 lakhs is exempt from tax, compared to ₹5 lakhs in the old regime, providing significant relief to taxpayers in the middle-income bracket.

How can individuals benefit from these changes in tax rules for house properties?

Individuals with multiple properties can benefit by renting out their properties, leveraging deductions on housing loan interest, and potentially treating additional properties as self-occupied, thus reducing their taxable income.