- Income will be taxable in the hands of your mother. You can receive the rental income in your account and enjoy the fruits of rental income but it will taxable in the hands of your mother only.
Property under mother's name but wish to add it into my ITR.
Hi guys, We are wanting to lease/rent a property we own (under my mother's name). However, we wish for the rental income to be collected under my, her son's, income and we don't want to transfer ownership of the property from her to me. What options could we consider to both retain her ownership, but collect the income under my name? One option we thought of was to sign a POA where she can assign rental duties, income collection etc of said property to me. Would this be alright or would there be anything else you would suggest? Thanks a bunch! Ayush
Asked 5 years ago in Income Tax
Even if you transfer POA it doesn't give you rights to collect rent and keep it with you because she is the owner and such rent needs to be taxed in her hands if it was so easy everyone would have just transferred their income by incorporating a POA.
What you can do is get a rent agreement registered between you, your brother and your mother where she will rent it out to your for a nominal value and then you can sub let it to other people and earn rental income.
In such case taxation would be a bit different.
If you need further assistance we can have a conversation if you are also from the same city.
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Thank you
Hello,
Clubbing provisions would work in case your mother doesn't transfer the asset and just transfer the income from the asset to your name.
POA won't help in this case.
Changing ownership only can transfer the income in your name with taxability also.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
Dear Ayush,
Hope you are doing well !!
No, even if she transfer the right to receive the rental income through POA still it will be taxable in her hands only.
Sec.60 provides that if a person transfers his income without transferring its Assets, then such an income is clubbed or taxable in the hands of transferor of Income.
You can go ahead with subletting option as advised by Mr Naman subject to conditions.
Hi Ayush
In view of the Income Tax Act, such rental income shall be taxable in the hands of your mother only.
One option could be to enter into 2 agreements-
1. Your mother rents out the property to you
2. You rent out the property to third person
Both the agreements could be at different rentals.
Though in practice, such agreements could also be questioned by the department. Hence, not advisable.
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