Query on rental income and tax implication for house wife

Tax queries 1589 views 4 replies

Poonam Dutt

director

27 Points Posted on 10 March 2014

Dear Sir,

Five years ago my father took a home loan to book a flat with a builder which was then under construction in Mumbai. The loan for booking the flat (when under construction) However when he took possession of the house two years ago it was registered in his and my name jointly. Upon registration he also closed the home loan by making full payment to the bank.

I am married and am a housewife. For the last two years the rent of Rs. 55000/- per month has been credited to my account by the tenant of this flat. I do not have any other income and from this rental income remit Rs. 1 lac per annum in PPF to lower my tax liability because of the rental income. I then pay tax as per my tax bracket incase there is any tax to be paid. My father does not show any income from this property in his tax returns.

Recently however a friend told me that this arrangement is not proper and my husband could be prosecuted for concealing the rental income of this house. I was also told that I cannot make a separate investment of Rs. 1 lac in PPF from this rental income as the limit of Rs. 1 lac applies to my husband which he avails of as well.

I am quite confused. Please advise.

Regards,

Poonam Dutt.

Replies (4)

Manoj Mehta

Head Of Department (Accounts & Finance)

1479 Points Posted on 10 March 2014

Dear Poonam

Dont worry, if the house is in your name than you are going on a right path.

As you told you are the co-owner and rental income is arising under your name so there is no problem in it. Your 26AS may be also showing the same if the tenant is deducting any TDS on the same.

And your PPF insvestment decision is also correct in this matter as you will get the benefit of the same upto rs. 1 lakh

Also there is no connection whatsoever with your husband in this case so there is no question of geting any prosecution. Do not worry.

All the best and regards to you.

Poonam Dutt

director

27 Points Posted on 11 March 2014

Thank you very much Mr.Mehta.

Regards,

P.DUTT

Poonam Dutt

director

27 Points Posted on 11 March 2014

Dear Sir,

Could you please let me know the implication of the following: My father took 6 months to close the loan with the bank. In those six months I was receiving rental income which was being shown by me as income and set off against Rs.1 lac PPF (to the limit permissable).

Regards,

P DUTT.

Manoj Mehta

Head Of Department (Accounts & Finance)

1479 Points Posted on 11 March 2014

Dear Poonam Your father is co-owner in house property?

if yes

than he can take the benefit of loan payment under 80c. Also interest paid benefit will be available under income from house property.

Dear i also suggest you to little tax planning in the same from next year onward. I suggest you to take half rent in the name of your father and half in your name. So your tax payment liability will be lower as you both will get the standard deduction benefits.

I hope my answer wil resolve your problem.

for more you can do pm to me.

regards