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Rent to mother

Accounting Entries 379 views 4 replies

I am running an office and the building is in my mother's name.Being old age my mother wants to transfer the building to my name but she says so long as she is alive i have to pay her the rent.Is it legally possible to enter into an agreement to pay her the rent and show that rent in my books as expense.

Replies (4)

Yes, it can be done.

The Income Tax allows us to deduct reasonable and justifiable expenses from our Income. However, when the payment for some expenses are made to relatives or persons who have substantial interest in your business or profession, such expenses may not be allowed to be deducted if they seem excessive or unreasonable.A relative has been defined in section 2(41) of the Income Tax Act 

Dear Manish Ji Would you please elaborate how it should be done? Should i  make an aggreement on a stamp paper that i have to give rent even though the proprty is inherited to me.or it will do verbally and i can claim expenses of rent. 

Originally posted by : HS Narang
I am running an office and the building is in my mother's name.Being old age my mother wants to transfer the building to my name but she says so long as she is alive i have to pay her the rent.Is it legally possible to enter into an agreement to pay her the rent and show that rent in my books as expense.

 

I missed the ownership transfer point. No, you cannot claim the amount paid. It would not be qualified as rent because you'll become the legal owner of the property. That would be your personal expense.


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