Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Rental income split in 4 people joint owned property

16 February 2024

We recently 4 people together purchased a property jointly. Its a let out property, and on managing the rent all people use one persons PAN for their HRA claims at office. We also have a joint loan. Details of income and split of each person as mentioned in sale deed.
P1: 5%, P2: 40%, P3: 33%, P4: 22%. Rental income: 290000/month without expenses, Loan amount: 7500000
So the question is 3 parts:

1. Since every tenant claims HRA from one owner pan card. how to split the HRA claimed TDS among other owners

2. Once the rent comes the loan EMI:65801 is paid, how do we each person show that they contributed to the loan from the bank transaction.

Please help us in understanding this situation.

Reply
Follow
Share

7 Replies

Saravanan nagaraj (463 Points)
Replied 16 February 2024

Purpose of purchasing property is to earn rental income know. Then it comes under income from business and profession.

Your rental income per annum cross GST threshold limit of Rs.20 lakhs. You should register under GST.

For Income tax, You need to apply pan card and registered your rental services business under GST.

Renew all your tenant rental agreement in the business name. Issue rental receipts, your tenant can claim HRA. If they deduct TDS against your rental service business. TDS amount will be deposited in your business pan card account. You can account all your expenses to reduce your profit.

Create a new bank current account for this business. Receive rent to this account and transfer to your housing loan EMI account.

At the End of year, you can share your income from business and file your income tax seperately and business.

You can download or get interest certificate from bankers. Use this interest amount for your individual income tax deduction.

Then only you can solve this problem otherwise, one pan card shows huge income which is not actually earn. Rest of them earned income again taxable when you declare it in income tax return.

Let me know your thoughts. I will share my suggestion. Thanks

1 Like

Dinesh udhayan (5 Points)
Replied 16 February 2024

Hi Saravanan,
Thank you soo much for the reply, But wouldn't the rental income gross be checked after dividing individually.

Example:

P2 has 45% share and annually the rental income for them would be 14 lakhs which is below the threshold. Still should the GST registration required.

Dinesh udhayan (5 Points)
Replied 16 February 2024

Hi Saravanan,
Thank you soo much for the reply, But wouldn't the rental income gross be checked after dividing individually.

Example:

P2 has 45% share and annually the rental income for them would be 14 lakhs which is below the threshold. Still should the GST registration required.

Saravanan nagaraj (463 Points)
Replied 16 February 2024

Hi Dinesh,

In your point view, as an individual your income from property doesn't exceed GST threshold limit. But, purpose of purchase property is not for your personal use know.

You have given one person pan card for rental agreement and TDS was deducted for that one Pan no know. Now, calculate whether he is liable or not.

Purchase an asset and renting by people is considered as business income.

sabyasachi mukherjee (26231 Points)
Replied 17 February 2024

1. hra received is adjusted his proportionate share of rent subject to sec 10(13A) RULE 2A

RAJA P M ("Do the Right Thing...!!!") (127417 Points)
Replied 17 February 2024

Yes, I agreed to Mr Saravanan Nagaraj replies...

@ Mr Dinesh,
As per Your query the solution is there as per the Mr Saravanan Nagaraj...

Otherwise it will be difficult for the income transaction in single person. Also he face dept notices.