Summary of this article
Home-loan tax benefits require ownership or co-ownership.
Family pension is taxable as other income.
Spouse’s gifted asset gains may trigger clubbing.
I am buying a flat in my mother’s name as I want to get rebate on registration and stamp duty though the home loan will be in my name and I will pay the equated monthly instalment (EMI) on the loan. Will I be able to get full income tax benefits for the home loan?
A loan applicant or co-applicant who is not the owner or co-owner of a property cannot claim any income tax benefits in respect of the loan even though he/she is paying the EMIs. Since you intend to buy the flat in your mother’s sole name, you will not be eligible for any tax benefits in respect of the loan instalments repaid, including the interest paid on the loan.
If you are planning to buy the property with your resources, it is advisable to buy it in your name in order to avoid any legal issue of inheritance or succession in the future. It is not advisable to buy a property in another person’s name only to avail of the very small monetary benefit of lower registration or stamp duty charges.
I am a widow and receive a family pension from the employer of my late husband. What is the tax liability in respect of that pension? I also have taxable income from bank fixed deposits (FDs).
After the death of an employee, the family pension received by the legal heirs of the deceased is treated as income of the legal heir and becomes taxable under the head “Income from Other Sources”. However, you are eligible to claim a deduction equal to one-third of the pension received by you, subject to a maximum deduction of Rs. 15,000 under the old tax regime (OTR).
If you opt for New Tax Regime (NTR), a higher deduction of up to one-third of the family pension or Rs 25,000 is available. This income, after such deduction, will be added to your income and get taxed at the rates applicable on your slab.
My wife is the owner of a shop for which I made the payment from my individual savings bank account. After 10 years, she has now sold the shop and made a capital gain of Rs 5 lakh. The proceeds of the shop have been deposited in our joint savings bank account. She is a homemaker and is not assessed for tax. Should she file an income tax return (ITR) and pay tax or do I have to show the capital gains in my ITR and pay the tax on capital gains on the said property in my ITR.
Though you had purchased the shop in your wife’s name, the beneficial ownership of it always remained with you, as you had paid for it. Even if you treat the payments made by you for the shop as a gift from you, and without consideration, the capital gains arising on sale of this shop is taxable in your hand. So, you should include such capital gains in your income.
This is due to the clubbing provisions of income tax laws which provide that all the incomes which arise on the asset transferred to the spouse without any consideration are included in the income of the spouse who transfers such asset.
The author is a tax and investment expert and can be reached at jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
