Joint property fully paid by husband but occupied by wife for her business

Tax queries 364 views 2 replies

mg23

eng

30 Points Joined June 2019

Hello Experts, I am a salaried employee and in process of owning a commercial property - I being first owner and my wife second owner. The property will be purchased completely from my funds (My wife is co-applicant in loan but it will be serviced by me completely). I am adding her co-owner just for social reasons. I file ITR2. I already own my self occupied house (single owner). I fall in 30% income category currently. My wife would be running her own business at the said premises (profession). She files ITR4 (presumptive). She falls in 5% income category currently. I have following questions 1. Is she allowed to pay rent to me? Is she allowed to claim it as a business expense (presumptive)? 2. Can I show rent paid by her in my income tax return completely under "Income from House Property"? Am i allowed to claim deduction for interest paid under "Income from House Property"? Which ITR form i should be filing - ITR2? In my income tax return, the said commercial property would be shown as "Let out"? My goal is not to save tax but to follow the correct practice. I would appreciate if Experts on this forum can enlighten me with the correct thing to do. -Thanks

Replies (2)

Gauthami

Student CA Final

431 Points Joined December 2014

✓yes she is allowed to pay you rent which should be the rent you would have received, if you had given on rent to third party and TDS should be deducted on such payment by her if it exceeds 2,50,000/- p.a
✓no she can't claim expenditure if she is filing return on presumptive basis income
✓yes you can show rent and claim interest deduction only to the extent of ur share agreed at the time of purchasing property by showing as let out under income from house property as u shown her as co-owner in property deed even though entirely funded by you