If unrealised rent is recovered then?

The amount of rent that the landlord was unable to reclaim from the renter is called unrealised rent. This can be subtracted from the actual rental income. The unrealised rent may equal the amount of the actual rental. But what if unrealised rent is recovered then what can be done? Don’t worry, you will get to know through this answer.

What if unrealised rent recovered?

If the owner takes legal action against the renter and recovers the unrealized rent, it will be subject to Section 25A taxation. The year that you receive the money will be the taxation year. This will also fall under the income from the real estate section. You will still need to pay taxes on the sum even if you don’t own the property.

Recovering unrealised rent and overdue rent Section 25A states an important thing. The amount of unrealised rent realised later by an individual taxpayer is subject to income tax in the earlier year in which such rent is earned or realised. It is regardless of whether the taxpayer was the owner of the property in the previous year. The taxpayer is permitted to deduct 30% of any rent arrears or unrealized rent that they later realise.

Is unrealised rent taxable?

Unrealised rent is not taxable if the tax department is determined that the amount cannot be recovered. The non-realisation of the payment from the tenant must be immediately reported to the Income Tax authorities. Once this is established, the unrealised rent will be deducted from the rental payment.

What conditions are to be met when declaring unrealised rent?

When you claim unrealised rent, the following requirements must be satisfied:

• The lease is legitimate. This indicates that the lease must be signed and registered.

• The noncompliant renter has left the property, or measures have been made to evict him from it.

• The noncompliant tenant is not occupying any other assessee properties.

This is all I had to say about the if unrealised rent is recovered then what can be done.