Tax on rent over leased property

Hi,

Can you please be more specific. Its little confusing whether you have taken building on lease and running PG or its your wife.

Also, whats is total income from running PG and what are total expenses.  

Hi,

If you want to run this under someone else's name, its recommended that lease should also be under his/her name. Considering that you have already registered the lease in your name, you may sub-lease it to that person. It will avoid any unnecessary questioning from income tax authorities in future.

Also, I am assuming, that investment will ne made by you. However, its not an ideal scenario. Ideally, you should give loan to your wife/his brother and chathe interest thereon and your wife can show that interest as business expense.

This will be considered as business income and tax will be paid as per the slab

So there are three transactions involved.

1. Lease between you and home owner.

2. Your wife running this PG on such leased property.

3. This would occur in future that you have sub leased this property to your wife.

On which transaction you wish to know the tax?

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

It would be better if you transfer the lease on your wife's name name because showing a sub lease in your name wont serve the purpose of planning tax as you will have to include such sub lease income in your return of income.

In both the cases it would be business income and the tax would be charged at slab rates depending on your profit and you can even take benefit of 44AD.

If you need any assistance feel free to contact me.

Hello,

It would be advisable to make the lease in your wife's and wife's brother's name if you want the income from such renting of such proeprty to be taxable in their hands. Sub-letting would bring you under the tax circle. To avoid the clubbing provisions, ti would be better if you register the lease in your wife's name.

I hope that this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

For further understanding, you can contact us directly or take a phone consultation.

Dear Sir,

Hope you are doing well !!

It would be treated as business income and tax will be paid as per individual slab rate.

However, you can take the benefit of presumptive taxation scheme.

It is advisable to make the lease in your wife's & wife's brother's name.