A couple very recently bought 2 flats in joint names (50% each ). Now the husband continues to be employed (taxed in the higher slab) while the wife has stopped working due to health issues. Also, they have a situation where they want to live in a diffferent 3rd location on rent which is closer to wife's parents home in the same city. The husband's HRA allowance is same as the rent in all 3 locations. Now that the wife has no salary income, they are obviously sensitive to money issues.
Purely from a financial and tax planning perspective -
Is it better that they move to the rented accommodation; husband claims HRA and treat the rental income as income from House property and divides it beetween the 2 joint owners ?
Or they would be better off staying in one of the jointly owned properties and treat the other flat as rental incomme and get taxed on that ? Husband does not claim HRA in this case, apparently.
Any other suggestions ?
Regards
CAclubindia
