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According to the Income-Tax Act, coowners of a property are required to pay tax on rental income according to their respective share in the property
I am 64, retired, and looking to sell a flat that I jointly own with my wife. We purchased it 24 years ago. How will the LTCG be calculated? What will be our tax liability, and when will the tax have to be paid? Also, please suggest how we can save tax.
Jayant R. Pai, CFP and Head of Marketing, PPFAS Mutual FUND replies: "Though you purchased your house 24 years ago, 2001-02 will be considered the year of purchase for computing long-term capital gains (LTCG) tax. In case you sell your house in the current financial year, your cost of purchase will be inflated by 2.8-times to adjust it for inflation and LTCG tax will be charged at 20.8%. The owner or joint owners of the house will be liable to pay the tax in proportion to their holdings. It will have to be paid for assessment year 2019-20. You can avoid this tax either by investing the gains, up to Rs 50 lakh, in capital gain bonds of REC or NHAI, purchasing another house within two years from the sale or constructing a house within three years from the sale."
My wife and I have jointly taken a home loan to purchase a flat and we are thinking of giving it out on rent. If the tenant issues the rent receipts only to my wife, who is also a working professional, will I still be required to show it as income from property?
Amit Maheshwari Partner, Ashok Maheshwary and Associates replies: "It seems that the flat is co-owned by both you and your wife. According to the Income-Tax Act, coowners of a property are required to pay tax on rental income according to their respective share in the property. So, both of you will have to show rental income under the head ‘income from house property’ when filing income tax returns. Also, both of you can claim deduction on the interest paid on home loan in the proportion of your ownership of the house— as disclosed at the time of reporting your rental income."
