I know that people sometimes get tripped up by its and it's since the possessive apostrophe gets in the way of knowing which is which.
A way to figure it out, at least in this example is that the contraction convention trumps the possessive rule.
It's is the contraction for "it is". The apostrophe represents the missing letter.
That leaves its to be possessive. This isn't the only possessive to not use an apostrophe. There is also his and hers that I can think of off the top of my head.
To recap: it's = it is, its = possessive.
The house, it's beautiful, sadly its lawn needs works.
Hope that clears things up.