Last Updated:
Owning more than one house means you cannot file ITR-1, even if the second property has no rental income.
If you own two houses, you must file ITR-2, as ITR-1 is only allowed for a single property.
When it comes to filing income tax returns, choosing the right form is often more confusing than calculating the tax itself. Many salaried individuals assume that if they don’t have any complex income sources, ITR-1 (Sahaj) is the safest option. However, things get tricky when someone owns more than one house, even if the second property does not generate any rental income.
For the assessment year 2025-26, experts point out that the number of houses you own plays a big role in deciding which return form you should use. If you mistakenly file the wrong form, the Income Tax Department can reject your return, or even raise queries later, leading to unnecessary stress.
Owning more than one property means ITR-1 cannot be used
According to tax experts, ITR-1 can only be used by individuals who own a single house property. If a person has two or more houses, they cannot file using ITR-1, no matter whether the second property is locked, vacant, or used occasionally. Under the Income Tax Act, only one house can be declared as “self-occupied.”
Any other property is automatically treated as a “deemed let-out” property. This means the taxpayer must disclose a notional rental value for the second house, even if no rent is actually received. Because of this provision, ITR-2 becomes the mandatory form for such cases.
Why ITR-2 is the safer choice in such situations
ITR-2 is specifically designed to capture details of multiple house properties, capital gains and other income sources. Filing under this form ensures full compliance with the law and reduces the chances of queries or notices from the Central Processing Centre (CPC). Even if you have no rental earnings, reporting the second property under ITR-2 shows transparency and protects you from future scrutiny.
Tax advisors say that using the correct form is as important as disclosing the right figures. Filing ITR-1 when you own two houses is a common mistake, but one that can easily lead to rejection or penalties.
Who can file ITR-1 and who must switch to ITR-2
Form ITR-1, or Sahaj, is meant for salaried resident individuals with income up to Rs 50 lakh. It covers income from salary or pension, income from one house property, agricultural income up to Rs 5,000 and some capital gains (such as long-term gains under Section 112A up to Rs 1.25 lakh). It also allows income from simple sources like savings or fixed deposits.
On the other hand, ITR-2 applies to individuals and Hindu Undivided Families (HUFs) who do not have business or professional income but earn from wider sources.
This includes those with more than one house property, higher agricultural income, capital gains from shares or property, unlisted equity shares, or foreign income/assets. Non-residents and company directors also fall into the ITR-2 category.
Filing the right form saves time and prevents penalties
The key differences between ITR-1 and ITR-2 come down to the type of income, the number of properties and the total income limit. ITR-1 is simple, but it is restrictive. ITR-2, while a bit more detailed, is flexible enough to handle multiple income types and properties.
Tax specialists advise that before filing, individuals should carefully check their income sources and property ownership.
Filing the correct form not only ensures compliance but also provides peace of mind that the return will be processed smoothly without any unwanted surprises from the tax department.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
- Location :
Delhi, India, India
Read More
