Notional Rent

Notional rent refers to the deemed rental income that could have been earned from a property if it were rented out, even though it is not actually let out. Under Section 23 of the Income Tax Act, the annual value of a self-occupied property is treated as nil, meaning no notional rent is taxable. However, if an individual owns more than one self-occupied property, only one can be treated as self-occupied (with nil annual value), and the others are considered deemed to be let out—for which notional rent is calculated and taxed under “Income from House Property.” Example: If you own one self-occupied house, no rental income (notional rent) is added to your taxable income. But if you own two houses and both are self-occupied, you can treat one as self-occupied (no tax), while the other will be considered deemed let out, and notional rent will be taxable