I own a flat from which I'm earning rent. The rent is clubbed with my salary and I'm paying tax at the rate of 30 per cent. I want to gift the flat to my son when he turns 18. As the rent would then be earned by him and will be his only income, will he need to pay tax? Also, do I have to pay stamp duty while making this gift?
You may gift the house to your son once he turns 18 and in such a case, the rental income derived from such a property will be taxable in his hands. If his income is less than Rs 2.5 lakh, there would be no tax. If he has other income, he will pay tax according to the tax bracket. To make the gift, you may execute the gift deed and to transfer the house, you may have to execute the deed and pay the stamp duty which will depend on the state where your house is situated. Different states have different rates of stamp duty and it would be calculated on the circle rate of the property where your house is situated. Circle rates are announced by the government from time to time and details are available at the office of registrar.
I have a joint home loan with my wife and the property is in our joint name. If the equated monthly instalment is paid out of our joint account, can we both claim exemption? Do we have to show the repayment from our separate bank accounts?
Since the EMI is paid from a joint account, the deduction can be claimed by both of you to the extent the repayment is made from your respective income sources. However, if such deduction is questioned by tax authorities, appropriate documentation needs to be produced showing that payment has been made by both of you from your respective income sources. Therefore, both should transfer your shares in EMI to the joint account so that if any question arises, it is easy to prove that you both repaid the loan and, hence, are eligible for deduction for the portion paid.
Kuldip Kumar,
partner and leader (personal), Tax PwC India, answers your questions
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in
