Home Loan Tax Benefit Calculator

Home Loan Tax Benefit :

The owner of a house property is taxed under the head ‘Income from House Property’ in his income tax return. Income from a property which is used for carrying on business or profession is not taxed under this head.

Calculation steps for Home Loan Tax Benefit :

1. Gross Annual Value of the property : The gross annual value of a self-occupied house is zero. It is the rent collected for a house on rent.
2. Less Municipal Tax : Municipal tax, if paid, then it is considered as a deduction.
3. Net Annual Value : Net Annual Value = Gross Annual Value – Municipal Tax
4. Less 30% standard deduction on NAV : A standard 30% deduction on Net Annual Value is allowed as a deduction under section 24 of the Income Tax Act. No other expenses such as painting and repairs can be claimed as tax relief beyond the 30% cap under this section.
5. Less Interest on home loan : Interest amount on home loan is considered as Deduction.
6. Income from house property : The resulting value is your income from house property. This is taxed at the slab rate applicable to you.
7. Loss from house property : Since the gross annual value of a self-occupied house is zero, claiming the deduction on home loan interest will result in a loss from house property. This loss can be adjusted against income from other heads.

Consider following example to understand the Home Loan Tax Benefit calculations:

Suppose, Nishant has one house given on rent. He receives rent amount annually Rs 5,00,000 and he pays Rs 10,000 municipal tax.He is paying interest amount Rs 15,000 for home loan.
Calculations :
Rent Income = 5,00,000
Municipal Tax = 10,000
Interest Amount = 15,000
Net Annual Value= 5,00,000 - 10,000 = 4,90,000
Standard Deduction = (5,00,000 - 10,000)*(30 %) = 1,47,000
Home Loan Tax Benefit= (Nav - Standard Deduction) - Interest Amount
= (4,90,000 - 1,47,000) - 15,000 = 3,28,000
So, Nishant's Income From House Property is Rs 3,28,000