I am salaried in government sector and I own an apartment in noida. I have 100% contributed for buying this apartment. I am also paying full EMI for home loan. My wife is house wife and has no income. Her name appears in sale deed. she is also co-applicant in home loan. I want to put this apartment on AIRBNB for daily rental purpose. AIRBNB is asking GST number. My questions are: 1. Can I give this apartment on rent to my wife by signing rental agreement. She will register GST number in her name and run rental services. She will pay monthly rent of this apartment to me as per market rate in my bank account from her current account. 2. My wife will register GST number and will open current account. The rentals from AIRBNB will come in her current account. She will also file separate ITR by showing this rental income under "Income from business". 3. I will show this rental received from my wife as "Income from house" and i will fully claim interest benefits. Is this possible. Is all above possible legally and income tax point of view. Pl suggest any other way to put my property on AIRBNB, if above is not possible. Manish chauhan
Dear Manish,
1 and 2. Yes, you can do so.
3. Yes, you can claim all benefits.
Strictly speaking, I dont see any voilation of tax laws here. However, increase tax authorities can question this arrangement and you will have to litigate.
But since you will be receiving rent as per market rates. There should not be much problem to substantiate the case before higher authorities.
Hi Manish
Yes, this is possible. Your wife can show it as a business income. There doesn't seem any complications involved.
Make sure proper rent agreement is entered into and monthly rents are paid.
Hi,
There is no violation of law and you can go for the arrangement you mentioned. Having said that, the authorities may question the transaction as it involves you and your wife and may claim this to be a mechanism to evade taxes as the rental your wife earns from airbnb will be higher that what she pays you. So it is important that you have all the documents in place. You may have to litigate but I dont see any major issue if all the documents are in place.
Regards,
Nikhil.
Thanks for reply. What documents do i need to keep ready if tax authorities questions my this arrangement. Pl advise, how can I go ahead with the above plan to make it fully legally.
Hi
You should keep the documents to substantiate that rent which you are receiving from your wife is as per the market rates. Screenshots from rental website will be helpful.
Further, you should keep the docs to prove that your wife is managing the entire Airbnb business and you don't have a role in that
Hi,
I think the following should be in place:
1.Rental agreement with your wife with a permission in that to sub let.
2. The rent you receive should be as per the market rates.
3. The sole manager/owner in the AIRBNB business is your wife and ensure that GST and other tax compliances are being met by her.
4. You are showing the rental income as your income and paying taxes on the same.
Regards,
Nikhil.
Dear Sir
You can do.
However you have to maintain rental agreement.
There is no violation of any law.
Dear Sir,
1) You can take GST No.for your wife and she can further let it out to ARBNB . She can not claim it as business income because she is notin the business of letting out of the property as per income tax law.Firstly TDS will be deducted by ARBNB in your wife account and then your wife will deduct TDS in your hand.
2) Obtain GSTIN in your name only and pay tax and obtain loan benefits .
Thanks
Yes your wife can sub let the said property with your consent
- rental income from sub-letting will be deemed as Income from other sources in the hands of your wife and not business income. Claiming deduction of rent paid to you in the hands of your wife will be subject to litigation.
- Compliances will also increase as your wife needs to deduct TDS for all payments made to you.
- In respect to documents, you need to create rental agreement between you and your wife and there should be proper agreement between your wife and ARBNB.
Thanks
Documents required:
#rent agreement clearly stating the per to sub-let
#periodic rent payments
#rent payment at FMV
As you mentioned that her name is included in sale deed means she is co owner,and giving flat on rent to co owner can be litigative.
It is advisable to take GSTN on your name itself and declare rental income in your hands only.
Dear Manish,
Hope you are doing well !
1.Yes, you can do so. There is no violation of law.
2. yes, it is possible.Such income is taxable under the head “Income from other sources” or profits and gains from business or profession, as the case may be.so, she can show rental income under "Income from business".
3. Yes, you can claim all benefits.
Please make sure that you have all the documents in order. Because it is subject to litigation.
Thanks & Regards,
Payal Chhajed
Please find below the list of documents:
1. Rent agreement of sub letting
2. Rent receipts should be as per market rates.
3. Rental income will be taxable in your hands. Please obtain the GSTIN on.your name.
Thanks & Regards,
Payal Chhajed