When a property is neither self-occupied nor actually rented out, Indian tax law treats it as deemed let-out. So how to calculate rent for deemed let out property? The calculation of taxable income from such a property follows a structured method under Section 23 and 24 of the Income-Tax Act, using a notional rental value as the Gross Annual Value (GAV).
How Can I Calculate Rent for Deemed Let Out Property?
To determine this:
You first identify the fair rent, standard rent, and municipal valuation of a similar property in the area. Your GAV is the lower of the standard rent and the higher of (fair rent or municipal valuation).
From GAV, deduct municipal taxes actually paid during the year to arrive at the Net Annual Value (NAV). Next, compute allowable deductions under Section 24.
Apply a standard deduction of 30% on NAV, and subtract the interest paid on home loan for that property (with no upper limit for let-out or deemed let-out, unlike self-occupied properties.
So the formula becomes:
GAV (notional rent)
Municipal Taxes = NAV
30% Standard Deduction − Home Loan Interest = Taxable Income from Property
If the home loan interest amount causes a loss under the house property head, you can set off that loss only up to Rs. 2 lakh against other income heads in the year. Any excess loss gets carried forward for up to eight years to offset future income from house property.
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How to Calculate Rent for Deemed Let Out Property?
ravi4
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2025-08-14T07:41:44+00:00 2025-08-14T07:41:47+00:00Comment
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