Regarding huf

This query is : Resolved

ABHISHEK AGRAWAL (Querist)
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05 January 2014 Dear Sir,
Myself, my wife and my father are in govt. services and are earning Rs.40000 each.
We have two home loans
First home is in the name of myself and my wife for which we are paying 12500 each i.e., 25000 as emi.

Second home is in the name of Myself, my wife and my father for which we are paying 9000 each i.e., 27000 as emi.

Myself and my wife are enjoying tax benefits on our first home.

My father is having tax benefits for the second home we bought.

I am planning to form HUF.

Query is -

1 Who should be karta for max tax benefits.

2 For the second home, to get maximum tax benefits, do we 3 need to transfer that home in the name of huf ?

3 If yes, than what is the procedure.

Thank you so much, waiting for your kind response

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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07 January 2014 In my view, it will not make any difference who becomes Karta, in any case you and your wife will form your own HUF right from marriage itself.
Secondly, regarding the second house, if you and your wife are co-owners and co-applicants for loan, you both can claim benefit of 80C in respect of your share of home loan installment subject to maximum of Rs. 1 lakh including the first home loan for which you both are already availing deduction.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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20 July 2025 Thanks for sharing the details. Here's a detailed response to your queries on HUF and home loan tax benefits:

1. Who should be the Karta for maximum tax benefits?
The Karta is the head of the HUF and is responsible for managing its affairs.
Usually, the eldest male member of the family becomes the Karta.
Since your father is a government employee and presumably elder, he can be the Karta.
This will help in better management of HUF assets and income.
The Karta's income (including income from HUF properties) is taxed in the hands of the HUF, separate from the individual members.
2. For the second home, to get maximum tax benefits, do you need to transfer that home in the name of the HUF?
Yes, to claim tax benefits under the name of HUF (such as deduction on principal repayment under Section 80C and interest under Section 24(b)), the property must be owned by the HUF.
Merely having co-ownership by individuals will not allow HUF to claim those deductions.
So, you should transfer the second home to the HUF for the HUF to claim tax benefits.
3. If yes, what is the procedure for transferring the property to the HUF?
Transfer of property to HUF can be done by:
a) Gift Deed: You, your wife, and your father (owners) can gift the property to the HUF.
b) Partition deed: If applicable, a partition can be done among coparceners with transfer to HUF.
c) Sale Deed: Sell the property to the HUF at market value (less common, and may have tax implications).
Key steps for gift deed:
Prepare a gift deed declaring the transfer of property from individuals to the HUF.
Get the deed registered at the local sub-registrar office.
Stamp the deed as per state stamp duty laws.
Intimate the bank/loan provider about the change in ownership if applicable.
Note: Gift from coparceners to HUF is generally not taxable.
After transfer, the loan should also be in the name of the HUF to claim deductions under HUF.
Additional points:
The HUF is treated as a separate taxable entity, so income from HUF property is assessed separately.
Tax benefits under Section 80C (principal repayment) and Section 24(b) (interest) can be claimed by the HUF on housing loan if the property and loan are in HUF name.
Discuss with a tax advisor or CA to draft the gift deed correctly and ensure loan documentation is amended.

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