indians typically consider house property as an important source of investment for longterm returns however with the direct taxes code dtc 2010 proposing significant changes in the way house property income would be subject to tax it becomes imperative for investors to take note of the changes and plan their investment decisions accordinglyrental incomethe income from letting out a house property will be computed under the head income from house property the income from house property will be computed as gross rent less the deductions specified under dtc gross rent is the amount of rent received or receivable for the financial year one can claim deductions for the amount of tax paid to the local authority a sum equal to 20 of the gross rent in respect of repair and maintenance of such property and the amount of any interest paid on loan taken for the purposes of acquisition construction repair or renovation of such property or the interest paid on the loan taken for the purposes of repayment of the loan there is no restriction on the amount of interest that could be claimed as deduction in case of a letout property further any interest in respect of the period prior to the financial year in which the house property has been acquired or constructed can be claimed as deduction in five equal instalments beginning from the financial year in which the property has been acquired or constructed if the house property is owned by two or more persons with definite and ascertainable shares then their income from such house property shall be computed separately in accordance with respective shares selfoccupied housethe provisions for the selfoccupied house are broadly similar to those under the current tax law thus in case of a selfoccupied property a deduction can be claimed up to 15 lakh for the interest paid on a loan taken for the purposes of acquisition construction repair or renovation of a house property in the year which such property is acquired or constructed it is important to note that certain conditions must be satisfied to claim this deduction which include that the house property should be owned by the person and not letout during the financial year deemed to be letout propertythe dtc has done away with the concept of deemed to be letout property if an individual owns more than one house the income from them will not be taxed under the current tax law only one house is considered as selfoccupied and other houses are considered deemed to be letout and taxed accordingly it is important to note that any interest paid on the housing loan for such properties will not be eligible for deductionrepayment of principalcurrently a person can claim a deduction up to rs 1 lakh on the repayment of the principal amount of the housing loan however no such deduction will be available under the dtcvikas vasal exec director kpmg