Key Points
A furnished house commands higher rental than an unfurnished one, however, do keep in mind that a higher income also comes with higher tax liability. To save income tax, a landlord might be inclined to charge his/her tenants rent separately for the unfurnished house and for the furnishings that he/she has provided..
"A landlord can show his rental income as income from rent of house property if he has separately created two rent agreements- rent for house space and rent for furnishings..
If the two rents are not separately shown then the landlord cannot show such rental income as income from rent of house property," says Prabhakar K S, founder and CEO, Shree Tax Chambers, a Bengaluru-based tax firm...
If the rent of the unfurnished house is classified as income from house property, then the landlord can claim certain deductions- standard deduction under section 24, municipal taxes paid and interest on house loan from the gross annual value of the house...
If a landlord is classifying the rental income from furnishings as income from other sources, then only expenses directly relating to such an income can be claimed as a deduction..
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Renting a furnished house; Will a separate rent agreement for fixtures help in saving taxes?
16, Mar, 24House rent: A landlord might be inclined to charge an higher rental for his/her furnished flat as tenants prefer to stay hassle free and in an homely environment with all the amenities. Experts suggest that a landlord create two separate rent agreement-one for the house rent and another for the rent for furnishings- bed, geyser, mattress, etc.