Income Tax on House Rental Income

If you and your wife are living together and she hasn't paid adequate consideration then as per Section 27 you will be called deemed owner and income will be added in your income and not in your wife's name. So you cann't show that income on your wife's name until and unless she pay adequate amount to you from her own funds.

Even if your wife has paid adequate consideration for the part of property owned by her, the income from house property shall be divided between you and your wife in the proportion of  ownership of the property.

How do you decide the proportion of ownership ? It is not mentioned in the property registration (Atleast for us it was not mentioned ) . The property was taken against loan which we and wife had paid back though the proportion was different in every financial year depending on my wife's income .

As per section 26 if proportion of house property is ascertainable in case of co-ownership then you both will get deductions according to your shares and in case of interest for both deduction under section 24(b) upto Rs. 1,50,000 will be available and principal amount will be allowed u/s 80C.

In case amount is not ascertainable then 50% can be taken as there are two joint owners in this case.