Rented housing Property and HUF

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A salaried individual with two properties in Pune, one rented out, is exploring the idea of using a Hindu Undivided Family (HUF) to reduce tax on rental income. While a friend suggested diverting rent to an HUF bank account and filing a separate HUF ITR, expert advice clarifies this is not a straightforward tax-saving method. As the properties are currently owned by the individual, the rental income will ultimately be clubbed with their personal income. Transferring the property to a major son (not a wife) might offer a route to tax assessment under the HUF, but direct diversion of income from self-owned property to an HUF is not permissible for tax saving.

Ritesh

Ritesh (Querist)
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03 February 2022 I am a salaried person and have 2 housing properties in Pune City.
Both Properties are purchased by me (not gifted or not from ancestors) . One property is rented while the other is self occupied .
I need to pay huge tax on rent income received from the flat . One of my friend suggest me that apply for HUF PAN card ( as I am married and having son ) and Bank account against HUF PAN card. Tenant will pay rent in HUF bank account and also he will declare my HUF PAN card number while filling his ITR . Also he suggest to file separate ITR for HFU PAN card.
I just want your guidance if this help me for save Tax? Is this information correct ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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03 February 2022 Its half truth.
As you are owner of the properties (as of now), you cannot divert your rental income to HUF. Finally it will be clubbed to your ITR.
Had one of the property belonged to HUF, the rent income could have been assessed under HUF PAN.

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Ritesh

Ritesh (Querist)
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03 February 2022 Thank you sir . So Ideally there is no way to save tax on rented income unless I transfer this property to my wife/son ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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03 February 2022 (In case of Gift) ... Not wife, but to major son.
As in case of wife (& minor son) clubbing provision will be applicable.

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