Transfer of a portion of house to huf

Tax planning 519 views 5 replies

akanksha

CA Final Student

325 Points Joined August 2012

Hello

One of our client is owning a bunglow registered in his name. The bunglow used to have ground Floor Only.

Recently a new first floor was constructed by the client taking a loan of Rs 1200000 on the property. Now the Client is living on the first floor.

Now my question is can the client sale/gift only the ground floor to its HUF?

If yes , then what will be the tax implications in case of

a) Sale

b) Gift

and whether the client can continue to claim intt deduction in house property as first floor is self occupied?

Thanks

Replies (5)

Mihir

Wealth Manager

5293 Points Joined December 2008

A gift deed can be prepared in favor of HUF in this case, however, one will have to consult a lawyer, as details of the ground floor such as sq ft, taxes etc will have to be mentioned clearly.

The owner may claim interest deduction in his ITR.

akanksha

CA Final Student

325 Points Joined August 2012

Thanks Mihir Sir,

and the ground floor rent income will be taxable in HUF ITR?

Mihir

Wealth Manager

5293 Points Joined December 2008

Ground floor given on rent by the HUF shall be taxable and HUF will have to show it in ITR.

CMA Poornima Madhava

CMA

13117 Points Joined May 2009

If the ground floor is sold/gifted for inadequte consideration to HUF, income from ground floor property is taxable in the hands of your client in the individual capacity.

Your client can avail deduction u/s 24b towards interest up to INR 1.5 lacs per year, in respect of the new house.