What would save tax for me while having own apartment?

Hi,

I have booked an under construction apartment, whose possession will be given in 2024. As of now it is on name of my wife and her father but at the time of possession, it will be registered as ownership. It is not on loan, but as slabs are constructed, I am paying to my father-in-law and he would pass that money to builder.

I am in 30% tax slab. If I want to save money under 80C, having it on name of my wife would save it? Or keeping it on name of wife and her father would save? Suppose if I show that I am paying rent to them.

Or any other way I should opt? Till now I have no investment or no other income except salary. I am new to understand this tax thing, so asking help here.

Thanks in advance.

Hey Abhishek! Owning an apartment gives you some good tax-saving options, but since it’s a bit complex with the ownership and payments made to your wife and her father, let me break down your situation and options clearly:

1. Who is the Owner?

Currently, apartment booked in your wife’s and her father’s name, but possession and final registration will be in your name (or joint name?) in 2024, right?
Tax benefits depend on the legal owner(s) on record at the time of possession and registration.

2. Tax Benefits Under Section 80C

Principal repayment on home loan qualifies for deduction under Section 80C (up to ₹1.5 lakh), but you mentioned no loan is involved. So, 80C deduction for principal repayment won't apply here unless you take a loan.
However, payments made under ‘stamp duty and registration charges’ can be added to the cost of the property but no direct deduction is available for these.

3. Tax Benefits on Interest Payment

Since there’s no loan, no interest payment deduction under Section 24(b).

4. Can You Save Tax by Showing Rent Paid?

If you show rent paid to your wife and her father for the apartment, they can declare that rental income, but:
- Your wife and her father need to pay tax on that rental income (after deducting 30% standard deduction on rent received).
- You get no deduction on rent paid unless you qualify for HRA exemption under salary (which depends on your salary structure).
So, rent paid to relatives is allowed, but is a paper transaction with tax impact on them. It doesn’t directly save your tax unless structured carefully.

5. Who Should Hold Ownership for Tax Benefit?

If your wife holds the apartment and she has taxable income, rental income received by her will be taxable. But if she has no income or lower tax bracket, this can be tax-efficient.
For you to claim any tax benefit on the apartment, the property should ideally be in your name or jointly owned.

6. Other Ways to Save Tax

Since you’re in 30% slab, consider investing in instruments under Section 80C like PPF, ELSS, NSC, Life Insurance, etc.
Also, check if you can claim HRA exemption if you pay rent (not to relatives).
If you take a home loan in the future, you can claim deductions on principal and interest.

7. Summary

Scenario	Tax Benefit / Implication
Apartment in wife/father-in-law name	Rental income taxable to them; no 80C benefit to you
Show rent paid to wife/father-in-law	No direct deduction for you; income taxable to them
Apartment in your name with loan	80C & interest deduction benefits available
Apartment in your name without loan	No 80C or interest deduction
Invest in other 80C instruments	Helps save tax regardless of property ownership

Recommendation:

Since no loan, buying the property in your name will not save tax unless you have home loan interest/principal payments.
To save tax under 80C, consider investments like PPF, ELSS, etc.
If feasible, plan a home loan to get the benefit of deductions on principal and interest.
Consult a CA or tax advisor to structure payments properly and avoid any unintended tax issues.