Running business on joint property

Dear Madam,

1) Yes you can sign lease agreement with your husband.

2) Yes you need to pay rent to your husband at market rate.

3) Income from business.

4) Yes you need to deduct TDS @10%. You need to obtain TAN and GST.

5) Yes

Thanks

First of all why do you want to start a seperate business on same property and complicate things. Start the business in your husband's name and there will be less complications.

However if you want to take benefit of 250000 exemption limit available to you as your husband is already earning salary income then:

1 as the property is in joint name then I guess there is no need to take property on lease from your husband.

2 however as he is paying interest on such property he will take the benefit of deduction of interest.

3 in this case the income earned will be house property income.

4 in above case no GST number will be required as the receipt won't be above 2000000 during the year I guess

Hi

1. Yes, you can do so. Though, it is prone to litigation.

2. Yes, according to the market value.

3. It shall be considered under income from business OR income from other sources.

4. How much will be the annual rent?? TDS deduction and TAN shall depend on the same.

You need to take GST.

5. Yes.

Since the apartment is in your joint names, with your husband being the first owner and more so claiming all the interest benefits, it is impossible to take rent in your name. He can't even relinquish or gift the apartment to you as even in that case he will be liable for tax on the rent income under the clubbing of income provisions. So bottomline is it is not possible for you to take the sole benefit.

If at all, divide the rent between you and your husband (not actual distribution, but when you file ITRs show half each). His portion will be taxable at usual rates, but the taxability in your hand will be lower as you may not have other income.

The income would be taxable under House Property, hence a flat 30% deduction and local authority tax will be available in addition to interest on loan borrowed for the flat. Remaining you can divide by two to pay taxes as applicable. You can further save u/s 80C to save taxes.

You cannot have any commercial transactions between two of you as the effect would be nullified by clubbing provisions. Even if it was allowed, the rent you would have paid to your husband would have been taxable in his hands. But since he is the owner, this is out of the question.

Yes for husband share you can entered rent agreement & deduct tds if monthly rent is >50K @5% you can show income under business income as per our opinion & claim exp.

Dear Madam,

1) It will be income from business if you are fully engaged in it.

2)yes. @10%

3) Rent received will be taxable in the hands of your husband.

4) Draft a commercial agreement with the third person.

Thanks

1 if the house is in joint name and it is shown as your asset then you can give your part of house on rent and then such income will be considered as income from house property, the articles which you are reading online might be the case where people are running that business and are not letting out their own house. However in your case you are letting out your own house so it's income from house property.

2 however as property is in your husband name and if you enter into rent agreement with your husband and then let out the property then such income will be shown as income from business.

And you are not required to deduct TDS on rent paid to your husband as the amount is below 50000 per month.

3 If your husband gives it on rent to 3rd person then such income will be considered as income from house property and not income from business

4 if your husband is letting out this property to third party then he simply need to sign a rent agreement with that third person.

Thank you,

Hope this solves all your queries

1. It is advisable to show it as business income.

2. You don't need to deduct TDS if you're not liable to audit.

3. If you rent it out to someone, it would be income under house property for your husband.

4. On your part, you need a rent agreement. However, the third party may also require a NOC from you.

Hi

1. Yes, you can do so. However, it may lead to litigations so my advise is to maintain proper documents, rent agreement, GST Number should be in your name etc.

2. Pay rent to your husband at market rent.

3. Income from business.

4. TDS deduction will depend on the rentals you pay. What is the estimated market rent?

You need to take GST.

5. Yes he can claim the benefits under house property.

Regards,

Nikhil.

1. Business income.

2. No need to deduct TDS.

3. If you rent it out to someone then it will be income from house property.

4. Make a rent agreement with a sub clause to further rent it out or use it for commercial purposes.

Hope that clarifies.

Regards,

Nikhil

Dear Rajni,

Hope you are doing well !

1. Yes, you can. However,it is subject to litigation.

2. Yes,you need to pay rent to your husband at market rate.

3. Such income is taxable under the head “Income from other sources” or profits and gains from business or profession, as the case may be.​ You can show rental income under "Income from business".

4. Yes you need to deduct TDS @10%. You need to obtain TAN and GST.

5. Yes. he can claim all the benefits.

Thanks & Regards,

Payal Chhajed

1. It is advisable that you will have to show rental income under "Income from business".

2. You don't need to deduct TDS provided you are not liable for audit.

3. It would be treated as income under house property for your husband.

4. Please make a proper rent agreement with all details/ clauses . It is advisable that please consult with the lawyer for drafting proper rent agreement.

Thanks & Regards,

Payal Chhajed

Hi,

1. Commercial arrangement between husband and wife are seen very closely by income tax authorities and courts. However, there is no such rule that husband and wife can't have commercial relationship. Yes, you can take the apartment on lease.

2. You should strictly take it in market rent.

3. Income from business.

4. Only if the rent amount per month is more than 50k till the time you are not subject to tax Audit.

5. Yes

If you are also giving it to somebody else, then it will look like a sham transaction. Because, if it has to be given to third person, then your husband can also do that. Why would he give it to you first and then you give it to somebody else.

You can have your arguments but based in my experience, it will not sail through.