Tax planning - jointly owns house property - and renting !

Tax planning 207 views 3 replies

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

Replies (3)

"..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 ?""
Yes. can do that, HRA can be claimed this way.

Dhiraj Sir, If you could spare a minute and comment on which approach will be more tax efficient ? Assuming 20K rent for each of 2 jointly owned flats and 20K for the rented accommodation and 18K as the HRA amount.

What is the salary received with DA?

Simply taking 15K as HRA exempt, he can save 8K PM from taxable income, And @ 20% slab, he can save around 20K tax per annum. (tentative figures)


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register