Taxability|deemed owner(mother)|property gifted to wife|hra
This query is : Resolved
01 May 2014
Hi,
Recently my mother has transferred her property in the name of my wife through Gift Deed.
Earlier, I used to pay rent to my mother and claim HRA exemption.
So could any one please confirm can I continue paying rent to my mother and claim HRA exemption as she is the deemed owner of the property.
Recently my mother has transferred her property in the name of my wife through Gift Deed.
Earlier, I used to pay rent to my mother and claim HRA exemption.
So could any one please confirm can I continue paying rent to my mother and claim HRA exemption as she is the deemed owner of the property.
01 May 2014
income from gift property will taxable in hand of your mother.
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01 May 2014
Thanks Rupesh.
Could you please tell me then how should I pay the rent to my mother i.e. directly into her account or route it through my wife account.
Also, as per my knowledge rent paid to spouse on property not acquired through owned funds is not eligible for HRA exemption
Could you please tell me then how should I pay the rent to my mother i.e. directly into her account or route it through my wife account.
Also, as per my knowledge rent paid to spouse on property not acquired through owned funds is not eligible for HRA exemption
01 May 2014
Also, in case you are aware of any ruling pertaining to the similar case please share with me.
26 July 2025
Got it! Here’s a clear explanation about the taxability and HRA claim in your situation:
---
### 1. **Deemed ownership for gift property**
* When your **mother gifts the property to your wife**, legally the **wife becomes the owner of the property** (as per the Gift Deed).
* For Income Tax purposes, **Section 27** states that the person in whose name the property stands in the records is the owner.
* Therefore, **your wife is the owner** for income tax purposes, *not* your mother, **unless the property is still legally in mother’s name.**
---
### 2. **Income from property (rental income) after gift**
* If the property is gifted and the **ownership transferred to your wife**, then **any rent received will be taxable in the hands of your wife**.
* **Your mother will not be taxed on rental income** from this property once gifted.
---
### 3. **Claiming HRA exemption when paying rent**
* You can claim HRA exemption **only if rent is paid to a landlord who is the actual owner of the property.**
* Since the **property is owned by your wife after the gift**, you **cannot pay rent to your mother and claim HRA exemption** on that rent.
* Rent paid to **mother (non-owner after gift)** will not qualify for HRA exemption.
---
### 4. **How to pay rent for HRA claim**
* You should pay rent **directly to your wife’s bank account**.
* **Paying rent to mother and routing it through wife’s account is not acceptable.**
* Rent paid to spouse’s property is scrutinized closely, but if the property is indeed owned by your wife and rent is paid to her, you can claim HRA exemption.
---
### 5. **Legal/Case references**
* **Section 27 of Income Tax Act:** Ownership for taxation purposes.
* **HRA Rules:** Rent must be paid to the owner or landlord.
* **CBDT circulars and various ITAT rulings** have upheld that rent paid to a non-owner (including spouse) is not eligible for HRA exemption.
---
### Summary:
| Situation | Owner for Income Tax | Rent Recipient for HRA Exemption | Taxability on Rental Income |
| ------------------------------- | -------------------- | -------------------------------- | ------------------------------------- |
| Property gifted to wife | Wife | Rent paid to wife only | Rental income taxable in wife’s hands |
| Rent paid to mother (non-owner) | Wife | No HRA exemption on such rent | Rental income taxable in wife’s hands |
---
---
### 1. **Deemed ownership for gift property**
* When your **mother gifts the property to your wife**, legally the **wife becomes the owner of the property** (as per the Gift Deed).
* For Income Tax purposes, **Section 27** states that the person in whose name the property stands in the records is the owner.
* Therefore, **your wife is the owner** for income tax purposes, *not* your mother, **unless the property is still legally in mother’s name.**
---
### 2. **Income from property (rental income) after gift**
* If the property is gifted and the **ownership transferred to your wife**, then **any rent received will be taxable in the hands of your wife**.
* **Your mother will not be taxed on rental income** from this property once gifted.
---
### 3. **Claiming HRA exemption when paying rent**
* You can claim HRA exemption **only if rent is paid to a landlord who is the actual owner of the property.**
* Since the **property is owned by your wife after the gift**, you **cannot pay rent to your mother and claim HRA exemption** on that rent.
* Rent paid to **mother (non-owner after gift)** will not qualify for HRA exemption.
---
### 4. **How to pay rent for HRA claim**
* You should pay rent **directly to your wife’s bank account**.
* **Paying rent to mother and routing it through wife’s account is not acceptable.**
* Rent paid to spouse’s property is scrutinized closely, but if the property is indeed owned by your wife and rent is paid to her, you can claim HRA exemption.
---
### 5. **Legal/Case references**
* **Section 27 of Income Tax Act:** Ownership for taxation purposes.
* **HRA Rules:** Rent must be paid to the owner or landlord.
* **CBDT circulars and various ITAT rulings** have upheld that rent paid to a non-owner (including spouse) is not eligible for HRA exemption.
---
### Summary:
| Situation | Owner for Income Tax | Rent Recipient for HRA Exemption | Taxability on Rental Income |
| ------------------------------- | -------------------- | -------------------------------- | ------------------------------------- |
| Property gifted to wife | Wife | Rent paid to wife only | Rental income taxable in wife’s hands |
| Rent paid to mother (non-owner) | Wife | No HRA exemption on such rent | Rental income taxable in wife’s hands |
---
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