Unsecured loan to wife

Tax queries 670 views 2 replies
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manager
42 Points Joined July 2012

Hi,

I am planning to buy property in my wife's name. I have two options:

1) Give a gift to my wife: She uses the money gifted by me and buy the property . In this case, any income generated from the property will be clubbed with my income. Is this correct ?

2) Give an Unsecured Loan: She uses the money LOANED by me and buy the property. In this case, any income generated from the property will NOT be clubbed with my income. This will be treated as her Income. Is this correct ? Is this a legal transaction ?

3) Is there any other option apart from the unsecured loan option mentioned above that will shift the tax liabilty on her ?

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On 02 April 2014 at 09:39 Report
Replies (2)
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Student
128 Points Joined October 2011

Hi,

1.Correct. Will be clubbed.

2. Correct.But u should charge interest on such loan (as interest free loan will be treated as mere transfer of money and clubbing is attracted).

3. U two can purchase property together and register the property jointly so that both can claim deduction of interest on loan.

 

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On 02 April 2014 at 11:25
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manager
42 Points Joined July 2012

Hi,

Income from assets transferred to spouse becomes taxable under provisions of

section 64 (1) (iv) as per following conditions:-

• The taxpayer is an individual

• He/she has transferred an asset (other than a house property)

• The asset is transferred to his/her spouse

• The asset is transferred without adequate consideration.

How do I ensure that I ensure that I meet the clause of ADEQUATE CONSIDERATION so that Income becomes taxable in her hand and not mine?

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On 02 April 2014 at 17:19


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