As per Section 71 of IT Act, 1961 a loss from house property can be set off against your other income generated during the financial year.
If the net result of your income under the head house property is a loss then such loss can be set off against your other income of the same financial year in which you have generated such loss. If such loss is not completely set off then such loss can be carried forward and set off in the subsequent assessment years up to 8 assessment years against your income from house property.
You can not carry forward and set off the loss from house property if you have not set off such losses against your other heads in the same financial year in which it is generated.
You can not have carried forward and set off benefit if your IT return for the same assessment year has not been filled.
How do I claim loss from house property against my salary ?
If during the financial year you have a loss from house property then the same loss can be set off against your salary. For claiming this benefits your have to follow the following steps;
- Provide an IT declaration to your employer by stating that you are going to have this much loss from house property based on the interest amount you are going to pay during the year.
- At the end of the year collect a certificate from you bank by stating the interest amount and principal amount separately.
- Provide that details of interest certificate to your employer in addition to the loss of house property calculation that you have carried out.
- Provide a declaration in addition to step 3 by stating that you have incurred a loss from house property. The amount of loss should be mentioned in it.
- Your employer will consider the loss from house property while deducting tax from salary.
You need not submit anything to IT department in support of your claim from loss from house property. In case the assessing officer ask for the document then the same has to be produced before him.
If you have not given a declaration at the beginning of the year and your employer has not considered loss from house property while calculating your taxable salary then you need to get it claimed from the IT department while filling your IT return with them. If you claim properly, then the extra amount deducted by your employer will be refunded to you. To get refund issued early you need to file your IT return online with correct bank details.
FAQ on how to set off your loss from house property
What is the format of declaration to be provided to my employer?
No specific format has been prescribed for such declaration under IT Act. But a employee can provide the details of calculation of loss from house property, PAN number, Employee Number, financial year and Name of the employee with the following declaration;
I, …………………..(name of the assessee), do declare that what is stated above is true to the best of my information and belief.