You can't pay rent to your spouse and claim HRA deduction.
Rent to a co-owner
Dear Sir, I am a 50 years old man, I own a 3BHK house and had taken Bank loan for same in the joint name with my wife. The loan is now paid off and there is no encumbrance on the property. I am the 1st owner and my wife is the 2nd owner. Its a joint property. All the property payment is done by me including maintenance, electricity etc. I would like to know whether I can take my wife's share of property on monthly rent from her. I will take exemption from HRA u/s 10 of Income Tax act and my wife will show the rent received as her house property income. Motive is tax planning for both of us. Await your advice.
Asked 6 years ago in Taxation
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8 Answers
1. It would constitute a fraud on the Govt., more so since it is a jointly-owned and presently used residential property.
You may receive entire rent amount in your name and file income tax efiling there is no problem in such transaction as a wife may not be filing income tax return in that case you will be able to show the income of rent in your income as you are the first owner of the property you can take NOC from your wife in case there is any issue that the tenant is asking no objection to pay the rent amount of your wife's share to you but you need not to provide any NOC without it is asked by the tenant
Thanks for your concern and rating this is not violating any income tax provision and in case you are not filing any return for your wife then you can take this income in your tax return so that you can pay the taxes arising out of the house property
the proportion of ownership would be determined based on amount funded by each person for the cost of property
2) in the present case your wife has not contributed anything towards the purchase consideration, she will not be treated as a co-owner of the property for income tax purposes, even when her name appears in the agreement as a buyer of the property.
3) While computing taxable rental income, a standard deduction for repairs and maintenance can be claimed at 30% of the net rental value (gross rent minus actual municipal taxes paid),
Dear Sir,
If such property is divisible then only such proposals will be considered. Since in the schedule of the sale deed and other documents it has shown as one unit, as such your proposal may not become true. However you may try.
1) Yes, you can take your wife's share for your own house on rent from her and give her a rent.
This will be avoiding your income tax liability as you both are owners of the flat
In my opinion, you may not be able to avail such benefits, however you can ask your auditor on this for more clarifications.
The property is jointly owned and she is also residing in the same property, will there be anything called as tenancy under the given situation?
