Loss from House Property - Carry Forward and Set-Off

House Property refers to the head of income used in the Income Tax Act to classify the income earned by taxpayers from owning immovable properties. This head of income can either show a positive income or a loss. In case of a loss, the taxpayer can set-off the loss against some other income earned in the same financial year. However, it may so happen that the assessee does not have any other income against which set-off can be made, or that the other income may be inadequate. Under such circumstances, loss from house property can be carried forward and set off in future assessment years. If a loss from house property could not be set off under the same head or under different heads in the same assessment year, such losses are allowed to be carried forward to be claimed as set off from the income of subsequent assessment years. Loss from house property can be wholly set off in the same assessment year from other heads of income. However, house property loss cannot be set off or was not wholly set off, it can be carried forward for 8 assessment years. House property loss carried forward can be set off against "Income from House Property" in the subsequent years.

Carry Forward of Loss from House Property

Loss from house property which could not be set off in the same assessment year can be carried forward for 8 years. Typically, loss from house property could not be set off in the same assessment year because of:

Absence of income under other head.
Loss under the head house property being more than Rs.2 lakhs in the previous year.
Inadequacy of income under other head.

Set Off Loss from House Property against Business Income

Brought forward loss from house property can also be set off against business income in the subsequent years if the assessee is in the business of sale and purchase of house properties. This stand has been upheld by the High Court when it denied a claim of the Assessing Officer and held that the set-off is allowable as both represent business incomes or business losses even though under difference heads by virtue of specific provisions of the Act. [Lavish Partment (P) Ltd v ACIT (2012)]

Filing of Loss Return

Under the Income Tax Act, losses can be carried forward only when a loss return is filed on or before the due date for

filing of income tax returns. However, loss from house property can be carried forward even if the return is not filed within the due date. Learn about the concept of tax audit turnover in income tax!

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Frequently Asked Questions

Common questions about Loss from House Property.

Loss from house property refers to the situation where the expenses related to owning a house property exceed the rental income earned from it. This loss can be set off against other income sources or carried forward to future assessment years.

Loss from house property that cannot be set off in the same assessment year can be carried forward for a maximum of 8 assessment years to be set off against future income from house property.

Yes, if the assessee is in the business of buying and selling house properties, the brought forward loss from house property can be set off against business income in subsequent years.

No, filing a loss return is not mandatory to carry forward loss from house property. This is an exception under the Income Tax Act, where loss from house property can be carried forward even if the return is not filed within the due date.

Loss from house property may not be set off in the same assessment year due to the absence of income under other heads, the loss being more than Rs. 2 lakhs in the previous year, or inadequacy of income under other heads.

Yes, loss from house property can be wholly set off against income from other heads of income in the same assessment year.

The "Income from House Property" head is used in the Income Tax Act to classify the income earned by taxpayers from owning immovable properties. This head can show either positive income or a loss.

No, there is no specific limit mentioned in the Income Tax Act on the amount of loss from house property that can be carried forward to future assessment years.

Yes, loss from house property can be set off against income from other heads, including capital gains, in the same assessment year.

The High Court ruling in this case upheld that brought forward loss from house property can be set off against business income in subsequent years if the assessee is in the business of buying and selling house properties.