Hello sir/ma'm, My wife is not employed. How can I make the following (partially) her income for which she can pay income tax? 1. I have one house (House 1) which is loan free and registered only in my name and I get rental income out of it. Is there a way she can have some percentage of the rental income in her name? 2. I have second house (House 2) which is registered jontly in my and my wife's name. I get rental income out of it. However, the EMI is paid only by me. Can she show 50% of the rental amount as her income? (IN the rentla agreement, we both ahve signed as joint owners).
Without actually transferring the house there is no way to show rental income in her name.
Yes in the case of second house she can show rental income and from that rental income she can contribute to EMI of house but if she doesn't contribute in purchase of house there can be a issue in future.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
In the first case, she can't get the rental income as she is not the owner
In the second case, she can get 50% of rent as per ownership
1. Since the house is in your name rental income will be taxable in your hands only. No other way is there.
2. Yes, in this case she can show 50% as income. But you can claim only 50% of interest benefit in your return.
It seems that in both the house you are the beneficial owner of the property therefore tax will be paid by you only.
Dear Sir,
Hope you are doing well !!
In both cases, income will be taxable in your hands only due to beneficial ownership of property.
Hello,
1. Since you are the only owner of this house property, income from this property would be taxable in your hands only.
2. Yes, your wife can declare 50% of the rental income in her income tax return.
I hope this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Hi
In both cases It will taxable in your hands only.
Thanks. For House 1, If I make her co owner of the property through Gift Deed, can she then have 50% of the rent as her income? For House 2, unfortunately, there is difference in opinion between the experts. If I claim only 50% of the interest benefit in my tax return, is it legally OK? If not, can you kindly explain.
1, No in that case clubbing provision will attract. Income of the property will be clubbed in your hand
2. You can claim the same as per the ratio of ownership.
- If you are beneficial owner in both the house, income, deductions and exemption is available to you only. In income tax beneficial owner matters and not registered owner.
- For detailed discussion please take phone consultation.
Hi,
Legally there is no option to artificially shift your income from you to your wife.
Under income tax, even if its a joint property, person who is funding the property will be considered as the owner of the property and rent will be taxable in his hands.
One option would be to rent out the property to your wife at a market rent and then your wife can sublet the property to other people and differential rent can be taxed in her hands. But, you need robust documents to substantiate this.
Hi
In situation one provision of clubbing will be applicable therefore income from rent will be taxable in your hands.
No.you have to show full rent income because it will completely taxable in your hands. As per income tax act rent income will be taxable in the hands beneficiary owner .
Please take a phone consultation for detailed discussion
No if a wife is given a gift by husband then in that case also clubbing would apply no that rent would again be taxed in your hand.
Thanks all. Things are pretty much clear now on rental front. The basic idea was not reducing tax, but provide spouse with some capital for her to start something of her own. As she is not earning, getting loans will be tougher. Hence, was looking fr rental income as one of the sources. If you can suggest other ways for me to provide her a capital (around 2 L) which she can use and any profit/loss thereafter is hers.
Dear Sir,
Hope you are doing well !!
1. Even if you make co owner of the property through Gift Deed, the income would be taxable in your hands only due to clubbing provision.
2.No, it is not legally ok.
Income will be taxable in your hands only due to beneficial ownership of property.
We may assist you in suitable ways for the same,
It is advisable to take a phone consultation for detailed discussion.
You can give her a interest free loan or give loan at a nominal interest so it will again help to show some expense.
Hi
Yes you provide a loan to her for her business or starting something for earning but interest on that should be reasonable in case of security you should have some documents or supporting for the same.
For more details discussion we can have a phone consultation.
If the objective is just to build capital, you can have the wife earns rental for an year or so (in which she is 50% owner).
Club that rental income in your income while filing your itr.
Post that whatever income wife earns using the rental money, it will be her own income and will not be clubbed under your name.
Alternatively, you can give loan to your wife for starting her business. She can pay interest on that loan to you and whatever profit she earns from the business, it will be her own profit.
