Allowable Expenditure from House Property
Income tax is a typical example of a direct tax. The tax imposed on a person or entity under the orbit of income tax law is called income tax. It is the tax levied directly on personal income. Following expenditures will be allowed as a deduction to determine the value of house property subject to tax –
Repairs and collection: A fixed amount oft of the annual value of the house will be allowed as repair charge whether may repair been undertaken or not.
Land revenue: Any sum paid by the assessee as land revenue is an allowable expenditure.
Insurance premium: Insurance premium for the house of paid is an allowable expenditure.
Mortgage interest: Interest on the loan received by giving a mortgage of house property for development and renovation of the house property will be an allowable expense.
Municipal/Local authority tax: The tax payable to the municipality or any other local authority is called annual charge and it is allowed as a deduction for tax.
Ground rent: If he has to pay any ground rent in respect of land it is called ground rest and it is an allowable expense.
Interest on borrowed money: Interest on money borrowed for the purpose of acquiring constructing, repairing and renewing etc. is deductible.
Unrealized rent: Loss of unrealized rent from the tenant is allowable on fulfillment.
Vacancy allowance: It means the house property not hired by a tenant part of rent becomes the loss.
Interest on the bank loan for a residential house: Interest on loan taken for the residential house from bank leasing company or other financial institution will be allowed as deduction.