The land or property tax paid on an investment (let‑out) property is fully deductible under the Income Tax Act when calculating “Income from House Property.” These investment land tax deductions allow municipal and property tax paid during the financial year subtracted from your gross annual value to arrive at the Net Annual Value. After this, a standard deduction of 30% of the Net Annual Value is allowed under Section 24(a), regardless of actual maintenance expenses.
Is Land Tax Deductible on Investment Property?
If the property is rented and financed by a home loan, you can also deduct interest on home loan in full (no upper limit), under Section 24(b).
Example: You have a let‑out property with Rs. 500,000 annual rent. You paid Rs. 25,000 in municipal taxes. Your tax deductions are computed as follows:
Gross Annual Value: Rs. 500,000
Minus property tax: Rs. 25,000 → Net Annual Value: Rs. 475,000
Minus standard deduction (30%): Rs. 142,500
Minus home loan interest (e.g., Rs. 250,000)
Final taxable income from this property = Rs. 82,500; without property tax deduction, NAV would’ve been inflated.
Thus, land tax is fully deductible, lowering your taxable rental income significantly. However: Only taxes actually paid during the year qualify, not dues. This applies only to investment (let‑out) properties; self‑occupied properties do not get a deduction for municipal taxes.
Seek Assistance in the Assessment of Taxes by Experts at NoBrokerYour Feedback Matters! How was this Answer?
Shifting, House?
✔
Lowest Price Quote✔
Safe Relocation✔
Professional Labour✔
Timely Pickup & Delivery
Intercity Shifting-Upto 25% Off
Check Prices
Intracity Shifting-Upto 25% Off
Check Prices
City Tempo-Upto 50% Off
Book Now
Is Land Tax Deductible on Investment Property?
ali
143 Views
1
4 months
2025-07-18T09:47:08+00:00 2025-07-18T09:47:10+00:00Comment
Share