Deemed owner of property
This query is : Resolved
26 June 2017
I purchased a shop property in my wife's name by taking a joint loan. Most of the fund was provided by me by direct payment to the builder. My query is, how do I show the rental income from this shop in my return? Should I show it in schedule HP (house property) or schedule SPI (income from spouse clubbed)?
27 June 2017
Show in HP choosing option of co-ownership.
27 June 2017
Thanks. How about schedule SPI, I need to fill that too?
20 July 2024
If you have purchased a shop property jointly with your wife and you have contributed most of the funds, the treatment of rental income for income tax purposes can be understood as follows:
1. **Ownership and Rental Income**:
- Since the property is jointly owned by both you and your wife, you both are deemed owners of the property for income tax purposes.
- As per income tax rules, rental income from jointly owned property is usually considered in proportion to the ownership share.
2. **Treatment of Rental Income**:
- **Schedule HP (House Property)**: You should report the rental income from the shop property in Schedule HP of your income tax return. In this schedule, you will need to declare the gross rental income received from the property.
- **Income from Spouse (Schedule SPI)**: Since the property is jointly owned with your wife, you should also declare your share of rental income in Schedule SPI (Income of Spouse), under the section where income from assets transferred to spouse without adequate consideration is disclosed.
- **Clubbing of Income**: However, if your wife is not earning sufficient income to be taxed or if she is in a lower tax bracket, the rental income attributed to her share might be clubbed with your income as per the provisions of Section 64 of the Income Tax Act, unless certain exceptions or conditions apply.
3. **Filing Requirements**:
- You should fill out both Schedule HP and Schedule SPI in your income tax return. Schedule HP will capture the details of rental income and deductions related to the property. Schedule SPI will capture the details of income from assets transferred to your spouse.
- Provide accurate details of the rental income, ownership share, and other relevant financial information.
4. **Documentation**:
- Ensure that you maintain proper documentation of the joint ownership, contributions made towards the property, and the rental income received. This documentation will be important in case of any scrutiny by the tax authorities.
5. **Tax Implications**:
- The rental income will be taxed in your hands and your wife's hands according to their respective ownership shares.
- Deductions such as municipal taxes, standard deduction on rental income, and interest on home loan (if applicable) can be claimed based on your ownership share.
In summary, for tax purposes, report the rental income from the jointly owned shop property in Schedule HP of your income tax return. Additionally, disclose your share of the rental income in Schedule SPI, considering the provisions of clubbing of income if applicable. Ensure compliance with documentation requirements and seek advice from a tax professional for specific guidance tailored to your situation.
1. **Ownership and Rental Income**:
- Since the property is jointly owned by both you and your wife, you both are deemed owners of the property for income tax purposes.
- As per income tax rules, rental income from jointly owned property is usually considered in proportion to the ownership share.
2. **Treatment of Rental Income**:
- **Schedule HP (House Property)**: You should report the rental income from the shop property in Schedule HP of your income tax return. In this schedule, you will need to declare the gross rental income received from the property.
- **Income from Spouse (Schedule SPI)**: Since the property is jointly owned with your wife, you should also declare your share of rental income in Schedule SPI (Income of Spouse), under the section where income from assets transferred to spouse without adequate consideration is disclosed.
- **Clubbing of Income**: However, if your wife is not earning sufficient income to be taxed or if she is in a lower tax bracket, the rental income attributed to her share might be clubbed with your income as per the provisions of Section 64 of the Income Tax Act, unless certain exceptions or conditions apply.
3. **Filing Requirements**:
- You should fill out both Schedule HP and Schedule SPI in your income tax return. Schedule HP will capture the details of rental income and deductions related to the property. Schedule SPI will capture the details of income from assets transferred to your spouse.
- Provide accurate details of the rental income, ownership share, and other relevant financial information.
4. **Documentation**:
- Ensure that you maintain proper documentation of the joint ownership, contributions made towards the property, and the rental income received. This documentation will be important in case of any scrutiny by the tax authorities.
5. **Tax Implications**:
- The rental income will be taxed in your hands and your wife's hands according to their respective ownership shares.
- Deductions such as municipal taxes, standard deduction on rental income, and interest on home loan (if applicable) can be claimed based on your ownership share.
In summary, for tax purposes, report the rental income from the jointly owned shop property in Schedule HP of your income tax return. Additionally, disclose your share of the rental income in Schedule SPI, considering the provisions of clubbing of income if applicable. Ensure compliance with documentation requirements and seek advice from a tax professional for specific guidance tailored to your situation.
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