If you're earning rent from a property you own (house, shop, warehouse, etc.), that rental income needs to be declared in your income tax return and added to your total income. Rental income is considered "Income from House Property" by the Income Tax Department. The good news is you can deduct several expenses like property tax, insurance, maintenance, and interest on home loan before calculating tax, which reduces your taxable rental income significantly.
For FY 2025-26, rental income calculation works like this: Start with actual rent received per year. Then add municipal value (assessed rent by municipal corporation) if it's higher than actual rent. Then subtract property tax you paid during the year. Then subtract 30% as standard deduction for repairs and maintenance. Then subtract home loan interest if you have one. The remaining amount is your taxable rental income, which gets added to your total income and taxed as per your tax slab.
Our rental income tax calculator helps you compute your exact tax liability on rental income. Many property owners don't realize how much they can save through deductions - property tax, insurance premiums, maintenance charges, and home loan interest all reduce your taxable income. Combine this with your salary income and other income to get complete picture using our comprehensive income tax calculator. This is especially important for NRIs who earn rent in India and have different tax rules.
If you have rental income, you might also need to pay property tax to your municipal corporation. This municipal tax is fully deductible from your rental income for income tax purposes. Also, if you've sold a property during the year, don't forget to calculate capital gains tax on the sale proceeds. Understanding all property-related taxes helps you plan better and avoid penalties.
For detailed rental income taxation rules and deductions, check the Income Tax Department's house property section at Income Tax House Property rules which explains standard deduction, home loan interest deductions, and Section 24 exemptions available on rental income.
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Yes, rental income is taxable under the head "Income from House Property" as per the Income Tax Act. It's added to your total income and taxed according to your applicable tax slab.
A standard deduction of 30% is available on gross rental income, regardless of actual expenses. This is in addition to other deductions like municipal tax, insurance, and maintenance costs.
Yes, you can claim interest on home loan for rental property under Section 24(b) up to ₹2 lakhs per year. This is in addition to the standard deduction and other expenses.
You can deduct municipal tax, property insurance, maintenance costs, repairs, and other expenses directly related to the rental property. These are in addition to the 30% standard deduction.