Can I file ITR-1 if I own two houses but have no rental income?
Many taxpayers are confused about whether owning more than one house, without rental income, disqualifies them from filing ITR-1. Tax experts clarify that multiple properties trigger ITR-2 filing, even if the second home remains vacant.
Hi, my father owns two properties but earns no rental income from either. He has no stock or mutual fund investments and meets all other eligibility criteria for ITR-1. I’m unsure whether owning multiple properties—even without rental income—requires filing ITR-2 instead of ITR-1. Could anyone clarify this? Any guidance from tax experts or fellow investors would be greatly appreciated, as we want to ensure his ITR filing is fully compliant with regulations.
Advice from a Tax Expert
CA Parag Jain, Tax Head at 1 Finance
For the Assessment Year 2025-26, ITR-1 (Sahaj) is only for individuals who own a single house property. When a person holds more than one property, they cannot use ITR-1, regardless of whether the second house is vacant, locked, or not generating rental income.
Under the Income Tax Act, only one property can be claimed as self-occupied. Any additional property is automatically treated as a “deemed let-out” property, and its notional rental value must be disclosed in the return.
In your father’s case, since he owns two houses, ITR-2 becomes mandatory. This form is structured to capture multiple properties and apply the “deemed let-out” provisions correctly.
To remain fully compliant and avoid unnecessary queries from tax authorities, your father should file ITR-2. This ensures transparency and proper reporting of both properties in line with the law.
ITR-1 vs. ITR-2: Key Differences
Choosing the correct Income Tax Return (ITR) form is crucial for every taxpayer. Selecting the wrong form can lead to rejection of the return and even penalties. The most common confusion for individual taxpayers is choosing between ITR-1 and ITR-2.
ITR-1 (Sahaj) is designed for salaried resident individuals whose total income does not exceed ₹50 lakh. It applies to taxpayers earning from:
- Salary or pension
- Income from one house property
- Agricultural income up to ₹5,000
- Other sources like savings or fixed deposit interest
However, individuals with foreign assets, multiple properties, business income, or income from gambling, lotteries, or horse racing cannot file ITR-1.
ITR-2 is for individuals and Hindu Undivided Families (HUFs) without business or professional income but with broader income sources. It covers cases where the taxpayer has:
- More than one house property
- Capital gains
- Unlisted equity shares
- Foreign income or assets
- Taxable income exceeding ₹50 lakh
- Agricultural income over ₹5,000
Tax experts advise taxpayers to carefully evaluate their income sources before filing to avoid mistakes and penalties.