Flat on Wife’s name. Is better deal for tax implication ?

POSTED BY ainvest ON January 7, 2013 9:23 pm COMMENTS (6)

Hi,

I am buying a small flat (worth of 10 lacs) from one of my family member. I come under 30% tax braket. My wife is HOUSEWIFE. I am thinking to buy this property on her name so that rental income(currently Rs. 5500 per month) will go on her name. This will help to save tax on rental income if it would have earn by me. It will help in the future when the rent will increase.

My wife will work after 2-3 years but still it is benifital as her tax bracket will be still less or equal to 20%.

I would like to know any other implications I need to consider.

Please provide your valuable inputs

6 replies on this article “Flat on Wife’s name. Is better deal for tax implication ?”

  1. SANJAY LAHA says:

    I have some query about premature repayment of housing loan. I want to one repay my Housing Loan outstanding of Rs. 1.8 lac. Shall I be eligible for 80C deduction for the whole principal portion (May be something like Rs. 1.78 lac after excluding interest part amounting Rs. 2000.00 approx)) ? Please guide me.

    1. Yes, the amount prepaid comes under principle payment and will be eligible for 80C !

  2. Dear Ainvest, if you are interested, still a way can be created. Please consult a CA & pay him a fee & S/he ‘ll tell you how?

    I’m not a CA. So do not ask me. 🙂

    Yes still it’s possible that I know.

    Thanks

    Ashal

  3. 1. I have bought this property from my elder brother and have paid him all the money few months back so in this case if I have to show as if my wife bought it from my brother how we can show the loan amount for her ?

    The house is now yours. I cannot think of a legal way to do what you a ask!
    Question now is can you sell the house to your wife? Yes.

    But can you give her a loan with interest to buy the house that you are going to sell!
    You will need an auditors opinion on this. It will proper paperwork with stamp duty paid etc.

    2. What proof she have to submit every year tax return that she is paying me(Husband) the interest+capital for the loan she took to buy this flat ?

    You will need to enter into a formal agreement. You will need to calculate the correct EMI for the interest you choose and as long as your wife deposits the EMI in your acc and you have records to prove it you don’t need to submit anything.
    Consult an auditor to get the paperwork done properly

  4. ainvest says:

    thanks!

    I got the concept of NOT giving as gift to wife but proper purchase of property however i have some queries

    1. I have bought this property from my elder brother and have paid him all the money few months back so in this case if I have to show as if my wife bought it from my brother how we can show the loan amount for her ?

    2. What proof she have to submit every year tax return that she is paying me(Husband) the interest+capital for the loan she took to buy this flat ?

  5. Not so simple!.
    since you are paying for the house, rental income will only be clubbed to your income and you will have to pay tax.

    You will have to give a housing loan to your wife at some interest rate.

    See this

    http://www.moneycontrol.com/news/real-estate/real-estate-investment-for-your-wifechildren_780623.html

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