19 January 2008
Husband was constructing Residential House Property on a piece of land registered in his name & construction of ground floor was completed. His wife agrees to pay amount for construction of second floor subject to condition that she would receive the rent which would be received from letting out the second floor of that RHP. On this condition wife gave amount to her husband by cheque. Now what will be the tax treatment (& Tax Benefit) in both of the assessee ? (Please also state your reply along with reason & References, if any)
19 January 2008
By the mere financing for the construction of second floor the wife does not get any right over the property. At best she is only a lender. Therefore no right accrues to her to receive rent and the rent paid will be treated as the property income of the husband who retains the ownership of the property.
21 January 2008
I FULLY ENDORSE THE VIEWS OF SRI. SRINIVASA RAGHAVAN AND WISH TO OFFER SOME FURTHER CLARITY ON THE ISSUE OF INCOME FROM HOUSE PROPERTY BELOW FOR THE BENEFIT OF OUR CA CLUB MEMBERS. IF THE PROPERTY IS IN JOINT NAMES OF HUSBAND AND WIFE , AND IF LOAN IS IN THE NAME OF BOTH ( FIRST NAME WHOSE AND SECOND NAME WHOSE IN LOAN DOCUMENTS DONT MATTER ) ,AND IF BOTH SHARE THE EMI PAYMENT ( ALSO DECLARING THE EMI SHARES TO THE LENDER OR A JOINT BANK ACCOUNT IS DEBITED),BOTH HUSBAND AND WIFE TOGETHER CAN CLAIM INCOME TAX DEDUCTION UPTO RS. 5 LAKHS ( UNDER 80 C UPTO RS. ONE LAKH EACH AND UNDER SEC. 24 INTEREST DEDUCTION UPTO RS. 1.5 LAKH EACH.). OTHERWISE ONLY THAT PERSON IN WHOSE NAME PROPERTY IS REGISTERED AND WHOSE NAME APPEARS AS BORROWER AND WHO PAYS EMI ONLY CAN CLAIM INCOME TAX DEDUCTIONS STATED ABOVE. IF THE WIFE ALONE TAKES THE HOME LOAN AND ONLY IF SHE IS SHOWN AS AND REGISTERED AS PROPERTY OWNER AND ONLY IF SHE REPAYS THE EMI , ONLY SHE IS ELIGIBLE FOR 80 C AND SEC 24 DEDUCTIONS. R.V.RAO
ONE OF OUR ExpertS SRI K V Subba Rao SUGGESTED EARLIER TO visit www.apnaloan.com in which answers to several FAQs on Home Loan are available R.V.RAO
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