Rental income: how to report it in your ITR

Rent is taxed under income from house property. The steps: take the annual value (rent, less rent you could not collect and less municipal tax you paid), deduct 30% of it as a standard deduction, then deduct interest on a home loan. A self-occupied house has a nil annual value. ITR-1 allows one house property; more than one needs ITR-2.

The figures are for the tax year 2025-26. From the tax year 2026-27 the Income-tax Act, 2025 keeps the same scheme: annual value in section 21, the 30% deduction and home loan interest in section 22, and arrears of rent in section 23.

The calculation, step by step

Example 1: a rented flat. Rent for the year is ₹3,00,000. Municipal tax paid is ₹12,000. Home loan interest is ₹1,50,000.

• Annual value: ₹3,00,000 − ₹12,000 = ₹2,88,000.
• 30% deduction: ₹86,400.
• Interest: ₹1,50,000.
• Income from house property: ₹2,88,000 − ₹86,400 − ₹1,50,000 = ₹51,600.

Example 2: a flat with a loss. Rent is ₹1,20,000, no municipal tax, interest is ₹2,50,000.

• Annual value: ₹1,20,000. Deduction at 30%: ₹36,000.
• Income: ₹1,20,000 − ₹36,000 − ₹2,50,000 = −₹1,66,000, a loss.

The self-occupied house

If you live in the house, its annual value is nil and no municipal tax deduction applies. You can still claim interest on a home loan, but:

• Old regime: interest up to ₹2,00,000.
• New regime: no interest deduction for a self-occupied house.

So a self-occupied house with a loan gives a loss of up to ₹2,00,000 under the old regime.

Losses from house property

• Old regime: a house property loss can be set off against income under other heads, up to ₹2,00,000 a year. The rest is carried forward.
• New regime: a house property loss cannot be set off against other heads.

The part not set off is carried forward for up to eight years and can then be set off only against house property income.

Most losses are carried forward only if the return is filed by the due date, but a house property loss is an exception: it is carried forward even in a belated return. See our guide on the benefits of filing a return.

Co-owned property

If you own the house with someone else, you report your share of the annual value and of the interest. Show the co-owner's name and PAN where the form asks.

Arrears and unrealised rent

If you receive arrears of rent, or rent you earlier could not collect, it is taxed in the year you receive it, after a 30% deduction.

Pre-construction interest

Interest for the period before the year in which the house was bought or built is claimed in five equal instalments: in that year and each of the next four years.

TDS on rent

A tenant who is a business, or one who pays high rent, may deduct TDS before paying you. That TDS shows in your AIS, and Form 26AS or Form 168, under rent received. You claim it as credit in your return. You must still report the full rent, not the net amount you received. In the crosswalk for the new Act, rent received appears under section 393 of the Income-tax Act, 2025. See our guide on TDS sections under the new Act.

Under the Income-tax Act, 2025, TDS on rent applies where the rent is more than ₹50,000 for a month or part of a month. The rate is 2% or 10%, depending on the kind of tenant and what is let.

Which ITR form

• One house property, income within other ITR-1 limits: ITR-1.
• More than one house property: ITR-2.
• You can treat up to two houses you live in as self-occupied, with a nil annual value. A third such house is treated as let out (deemed let out). With two or more houses you need ITR-2.

See our guide on which ITR form to file.

Details the return asks for

ITR-2 and later forms ask, for each property: the address, the tenant's name and PAN (if any), the loan lender and account, loan date and amount and the co-owner details.

Common mistakes

• Reporting only the rent you received after TDS.
• Claiming repairs on top of the 30% deduction. The law allows only the 30% deduction and interest on borrowed capital, so there is no separate claim for repairs.
• Forgetting the second house.
• Claiming self-occupied interest in the new regime.
• Missing the co-owner's share.

How TaxCare helps

TaxCare reads rent, TDS and interest information from the portal data and asks for the rest property by property. It applies the 30% deduction, the interest rules for your regime and the loss cap, and moves you from ITR-1 to ITR-2 when you have more than one house. It shows the old and new regime tax side by side.

This guide gives general information and is not professional tax advice.