Tax planning for my rent income

This query is : Resolved

Satish Mehra (Querist)
Follow

10 July 2025 Hello experts, I am a salaried individual, my slab is already in 30% taxed (40lakh salary). Now I have a building which i want to rent. Expected rent is 25 lakhs yearly. Please help me plan my taxes so that i can save in taxes. Is there any way i can take these rentals in HUF account. Or if there is any thing else please let me know.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

12 August 2025 1. Rent Income & Taxation Basics
Rental income is added to your total income and taxed at your slab rate (30% plus cess).
You can claim deductions under Section 24:
Standard deduction: 30% of net annual rent (after deducting municipal taxes paid).
Interest on housing loan: Deduct interest paid on loan taken for the property (if applicable).
Municipal taxes paid are deductible from rental income.
2. HUF (Hindu Undivided Family) Option
You can consider transferring the property to your HUF if it exists or create one.
Rent received in HUF’s hands is taxable separately with its own exemption and deduction.
The rental income will be taxed in the hands of HUF, which might reduce your personal taxable income.
Important: Property should be gifted or transferred legally to HUF to avoid income being clubbed in your personal income.
Income splitting in HUF is beneficial if the other members have low or no other income.
3. Setting up a Partnership Firm or Company
If you hold multiple properties or intend to grow rental income, setting up a firm or company is an option, but:
The firm/company will be taxed separately.
Complex and may not be beneficial for a single property rental.
4. Expenses to Deduct
If you manage the property yourself, only the standard deduction of 30% is allowed.
If you pay expenses like maintenance, repair, property tax, etc., pay municipal taxes and claim them.
Interest on home loan (if any) can reduce taxable rent income.
5. Other Tax Planning Tips
Invest in tax-saving instruments under Section 80C (max ₹1.5 lakh) to reduce taxable salary income.
Consider investing in Tax-saving Fixed Deposits, ELSS, PPF etc.
Explore if you can get any benefits under Section 80GG if you are paying rent elsewhere.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now