Chapter VII - Set Off, or Carry Forward and Set Off of Losses
Section 110
Section 110: carry forward and set off of loss from house property
Section 110 picks up where Section 109 leaves off for house property losses: any part of a house property loss that could not be set off against other income in the same year (because of the ₹2,00,000 cross-head cap, or otherwise) can be carried forward to future years - but only to be set off against future house property income, and only for a limited number of years.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where for any tax year, loss computed under the head “Income from house property” cannot be wholly set off against the income under any other head as per section 109, so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and— (a) be set off only against the income from house property, if any, assessable for that tax year; and (b) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following tax year and so on.
(2) No loss shall be carried forward under this section for more than eight tax years immediately succeeding the tax year for which the loss was first computed.
Introduction
A house-property loss that remains after current-year set-off under Section 109 may be carried forward. In later years it may offset only house-property income, and the carry-forward window ends after eight succeeding tax years.
Key takeaways
House-property loss carry-forward
House-property loss left after the permitted current-year set-off is carried forward and can be used only against later house-property income.
Eight-year limit
The remaining loss may be carried forward for no more than eight tax years immediately after the year in which it first arose.
Carrying the loss forward
Where a loss computed under 'Income from house property' for a tax year cannot be wholly set off against income under any other head as per Section 109, the unabsorbed loss (whether partly or wholly unabsorbed) is carried forward to the following tax year, to be set off only against house property income assessable in that year. If it still cannot be wholly set off, the remaining balance is carried forward again to the next tax year, and so on.
The eight-year time limit
No loss can be carried forward under this section for more than eight tax years immediately following the tax year in which the loss was first computed.
Current year before carry-forward
Calculate permitted current-year set-off under Section 109 first. Only the unused part moves into Section 110's house-property-only carry-forward ledger.
Step-by-step flow for applying Section 110
- 1
Is there a house property loss for the tax year?
- No: Section 110 is not needed.
- Yes: Go to the next step.
- 2
Has the permitted current-year set-off under Section 109 been made?
Only the part not set off against other heads under Section 109 (or the whole loss, if none was set off) is carried forward.
- 3
In the following tax year, is there income from house property?
- Yes: Set off the brought-forward loss only against that house property income (Section 110(1)(a)).
- No, or not enough: Carry the balance forward again (Section 110(1)(b)).
- 4
Has the eight-year window expired?
No loss is carried forward for more than eight tax years immediately succeeding the tax year in which it was first computed (Section 110(2)).
Practical checklist
Do
- Maintain a tax-year ledger showing original loss, current-year set-off and unused balance.
- Apply carried-forward amounts only against assessable house-property income within the eight-year window.
Avoid
- Do not carry forward the portion already used under Section 109.
- Do not use a carried-forward house-property loss against salary or capital gains.
Illustrative example
Worked example: tracking a house property loss over three years
Hypothetical facts (illustration only, not a real taxpayer): Mr. Rao computes a house property loss of ₹3,50,000 in Tax Year 1 and has enough salary income to absorb the ₹2,00,000 allowed under Section 109. In Tax Year 2 his house property income is ₹90,000 and in Tax Year 3 it is ₹1,00,000.
Tax Year 1
₹2,00,000 set off under Section 109; ₹3,50,000 - ₹2,00,000 = ₹1,50,000 carried forward.
Tax Year 2
Set off ₹90,000 against house property income; balance ₹1,50,000 - ₹90,000 = ₹60,000 carried forward. His salary cannot absorb any of it.
Tax Year 3
Set off ₹60,000 against house property income of ₹1,00,000; taxable house property income ₹40,000; no loss left.
Time limit check
Tax Years 2 and 3 fall within the eight tax years immediately succeeding Tax Year 1, so the set-offs are within Section 110(2).
Outcome
- Loss of ₹3,50,000 fully used: ₹2,00,000 in Year 1, ₹90,000 in Year 2 and ₹60,000 in Year 3.
- Keep a year-wise loss ledger showing the year each loss was first computed.
Glossary
- Carry forward
- Moving an eligible unused loss into a later tax year for permitted set-off.
- Set-off
- Using a loss to reduce income that the statute permits it to offset.
Frequently asked questions
Against what income can a carried-forward house property loss be set off?
Only against house property income in the following years - it cannot be set off against income from other heads once carried forward.
For how many years can a house property loss be carried forward?
Up to eight tax years immediately following the tax year in which the loss was first computed.
Need help applying this provision to your situation?
Get help planning your house property loss carry-forwardLast updated 9 October 2026