Every time the financial year ends, property owners get ready to file their income tax returns. In case your house generates more expenses than income, understanding how to claim these losses can help you lower your tax burden. Read on to get useful tips on how to maximise your tax benefits even as you follow all the provisions of the law.

Loss from house property basics

A loss from house property means your allowable deductions under the Income Tax Act exceed the income calculated from that property. Usually, such a scenario arises when you're paying substantial interest on your home loan while your property generates little or no income.

Section 24 of the Income Tax Act allows you to claim a standard deduction of 30% of the Net Annual Value for rented-out properties, plus interest on borrowed capital. For self-occupied properties, the maximum interest deduction allowed is ₹2 lakh per year. You can carry forward the remaining loss up to eight assessment years.

Documents needed

Your relevant paperwork includes:

• An interest certificate from your lending institution showing the home loan interest paid during the financial year.
• Receipts of municipal taxes paid to your local corporation or municipality
• For let-out properties - copies of your rental agreement and bank statements showing rent receipts.
• For under-construction properties - all construction completion certificates and loan disbursement statements.
• Property tax payment challans and maintenance bills

Computing your loss

To calculate your loss from house property:

1. Determine your Gross Annual Value (GAV): for self-occupied properties, it is typically nil; for let-out properties, it's the actual rent received.
2. Subtract any municipal taxes you've paid during the year to arrive at the Net Annual Value (NAV).
3. For let-out properties, deduct the standard 30% deduction from NAV. Then deduct the interest on your home loan as per Section 24(b). If your final figure is negative, that's your loss from house property.

Common filing mistakes

• Selecting the wrong ITR form: Individuals with property income need to use ITR-2, not ITR-1. Taxpayers under the new tax regime cannot claim the ₹ 2 lakh interest deduction for self-occupied properties.
• Some property owners forget to carry forward losses that exceed the ₹ 2 lakh set-off limit.
• Missing the filing deadline also affects carry-forward provisions.

Strategic filing tips

Consider the following pointers for claiming loss from house property:

• Maintain a clear record demarcating principal and interest components in your EMI, as only interest qualifies for deduction.
• For people with multiple properties, carefully consider which two to designate as self-occupied.
• Under the old tax regime, you can claim up to ₹ 2 lakhs of property loss against salary or business income.
• For under-construction properties, check whether construction was completed within five years to determine your deduction limit.

Conclusion

Claiming your loss from house property correctly before the Assessment Year 2026-27 filing deadline can deliver substantial tax savings while keeping you compliant. The key lies in understanding which deductions apply to your situation, maintaining proper documentation, and avoiding common filing errors.