My wife had purchased a residential apartment of Rs. 1 cr. and paid Rs. 30 lacs from her savings from salary income and the balance from a bank loan. The apartment is registered solely in her name. Wife has been paying emis from salary and rental income. Balance loan now outstanding is Rs. 30 lacs. I have funds available in my account from my savings. Can I use it to pay off her loan? Are their any tax implications like clubbing etc? If the property is sold will full capital gains be chargeable to her? Should I first transfer the amt. to her savings account as a gift and then she pays off the loan?
Hi,
It is advisable that first you transfers the money to your wife account through gift deed and then she pays off the loan.
It will not be subject to tax as the gift from the relative is not covered in the taxable income in the hands of the recipients.
It is advisable that pay the entire amount through banking channel.
Hello,
Yes, you can pay off your wife's home loan. The better way to do it would be to first the gift/loan the amount to your wife and then your wife pays off the loan.
No clubbing provisions would be applicable in such case. On sale, full capital gains would be chargeable to your wife.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
You can show it as gift then if she sells this house, the capital gain would be clubbed in your income u/s 64(1)(iv) if there is a question raised by AO which is rare in case of clubbing.
It would be better if you show it as loan given to wife and later wife repays it to you if she is having cash crunch right now or you want to save interest.
It is always better to first transfer the amount to wifes account and then to repay loan.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
Hello Sir,
As we know, on transfer of funds to your spouse, any income arising out of such funds is taxed in your own hands.
To avoid clubbing , you can give the money as a loan with interest (as per market rate) to your wife.
- It would attract clubbing of income if the property would be rented in future. Capital gain would also be clubbed proportionately. It is better to show it as a loan in the wife account and later receive it back in installments.
