How to save tax on rental income
The updated Income Tax Bill 2025 just made it clearer how homeowners can save on taxes, especially if you rent out your place.
The big changes? A straightforward 30% standard deduction and fresh rules for claiming interest paid before your home was built.
These tweaks, suggested by lawmakers in July, are all about making things simpler and more transparent.
Key changes in the new bill
Now, that 30% deduction kicks in after you subtract municipal taxes from your property's annual value—so you only pay tax on what really counts.
Plus, you can claim pre-construction interest whether you live in the house or rent it out.
Tax deductions you can claim
You get to deduct municipal taxes, take a flat 30% off the net rent, and claim home loan interest (including pre-construction interest spread over five years once you move in).
If renting puts your property at a loss, you can set off up to ₹2 lakh against other income each year and carry forward any leftover loss for eight years.