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Property in name of wife and mother

Rajiv Gupta (manager) (61 Points)

04 May 2016

Hi,

I want to purchase new property and planning to register the same in name of my mother and wife both so that I can claim the benefit of HRA. Can it be done ? Can I claim full benefit for paying rent to parents+wife or there may be issue ?

I will be taking loan for this property. Who should be co-applicants as per above details for tax saving.

regards,

Rajiv Gupta.

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6 Replies

Rajiv Gupta (manager) (61 Points)
Replied 05 May 2016

Hi,

Kindly suggest.

-Rajiv

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 05 May 2016

Dear rajiv,

Section 64 of the Income Tax Act contains clubbing provisions as per which any income from investment made or assets purchased in the name of close relatives (spouse, minor child or daughter-in-law) is clubbed with the income of the person making the investment and taxed accordingly .

If you buy a house in your wife's name but she has not monetarily contributed in the purchase, then the rental income from that house would be treated as your income and taxed at the applicable rate.

If you want to buy a house in your wife's name but don't want the rent to be taxed as your income, you can loan her the money. In exchange, she can give you her jewellery. For example, if you transfer a house worth Rs 10 lakh to your wife and she transfers her jewellery for the same amount in your favour, then the rental income from that house would not be taxable to you.

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Rajiv Gupta (manager) (61 Points)
Replied 05 May 2016

Thanks Vinay.

Here I will be paying HRA to landlord (Wife+Mother). Property will be in name of mother and wife and both are non-working. Home loan will be in my name.

If I pay HRA to them, will it be considered as my income?

Rajiv Gupta (manager) (61 Points)
Replied 05 May 2016

Thanks Vinay.

Here I will be paying HRA to landlord (Wife+Mother). Property will be in name of mother and wife and both are non-working. Home loan will be in my name.

If I pay HRA to them, will it be considered as my income?

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 05 May 2016

Yes same should be club in your name as per section 64 of income tax act.

S S Dahale ( Agri and business) (439 Points)
Replied 05 May 2016

If you want to take a loan to buy that property , i do not think bank or FI will permit it to be owned by third party ( your wife + mother) that is not the borrower, at the same time , there is NO way , those two can be treated as owner/ landlord to ask for rent from you , to further claim HRA.

you better take loan, regsiter that property in your name,once you make all revenuue and municipal documents in your name , you may GIFT it to your mother +wife , onec there name is included in place of your name , then again you execute a notarised document of rent , and pay them rent by cheque , and claim HRA , at the same time LOAN repayment will be your responsiblity , as Bank is not in loop in this entire process. this is OK as per IT tax , but remeber this jugglary is unethical also.....choice is yours...