₹17 lakh in rent, zero tax? The house-property strategy for landlords
If you earn rental income — from a residential flat, a shop or a commercial unit — you can legally collect up to ₹17 lakh a year and pay zero income tax, and with a home loan on a let-out property you can go even further. It comes down to two rules under "Income from House Property": the flat 30% standard deduction, and the (uncapped) interest deduction on let-out property. Here's how they work — and the conditions that matter.
Rule 1: the flat 30% standard deduction
On rental income you get a flat 30% standard deduction under Section 24(a) — no bills or proof needed. It's available under both the old and the new tax regime.
- Rent received: ₹17,00,000
- Less 30% standard deduction: ₹5,10,000
- Taxable income: ₹11,90,000 → under the new regime's ₹12 lakh threshold → zero tax (Section 87A rebate)
Because each co-owner is assessed separately, if you and your spouse genuinely co-own the property, you can each use this — so a couple can earn up to roughly ₹34 lakh in rent tax-free.
Rule 2: the let-out home-loan interest deduction
Most people know the ₹2 lakh cap on home-loan interest — but that cap applies only to a self-occupied house (and only in the old regime). For a let-out property, there is no cap on the interest you can deduct against your rental income, and this works in the new tax regime too.
- Rent: ₹25,00,000, less 30% deduction (₹7,50,000) = ₹17,50,000
- Less home-loan interest: ₹6,00,000
- Taxable income: ₹11,50,000 → zero tax under the new regime
The conditions that matter
- Zero tax needs the new tax regime and no other large income (the ₹12 lakh rebate does the work).
- In the new regime, interest is deducted against your rental income. You cannot turn it into a house-property loss and set that off against your salary or other income (and losses can't be carried forward) — that's an old-regime benefit.
- Rent is first reduced by any municipal taxes you pay before the 30% deduction is applied.
- Co-ownership only works where the ownership (and funding) is genuine — not a paper arrangement.
Takeaway: For landlords, the 30% standard deduction plus uncapped interest on a let-out property can bring your rental tax to zero — if it's structured right.
Own or planning to buy a rental property? Talk to us — we'll structure it for the lowest legal tax.
AI-assisted note, reviewed by Chartford Consultancy. Rules and figures can change with government notifications — talk to us to confirm exactly what applies to your business.
