Sameek Das (NA) 09 May 2013

Rent distribution from commercial property for tax purpose

I have a commercial Office space that is leased out. The property is under my name (working in a pvt company) and my mother (a housewife with no earnings). I get a monthly rent of Rs 32,760 after the TDS deductions. In order to claim tax when i file the returns under my name and my mother how should i distribute the earnings ratio between me and my mother for the received rent. Since my mother is a housewife should how much earnings would be tax exempted from her income. Should i include 90% of the rent under her name or another ratio between myself and my mother.Can you please let me know the best option.

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Rama chary Rachakonda (Secunderabad/Telangana state Highcourt practice watsapp no.9989324294 ) 09 May 2013

How to compute income from house property

Total annual rental income	Rs. 2 lakh
Less: Municipal taxes paid	(Rs. 10,000)
Net rental income	Rs. 1.9 lakh
Less: 30% of net rental income	(Rs. 57,000)
Interest on borrowed capital	(Rs. 1 lakh)
Income from house property	Rs. 33,000

From the total annual rental income, you have to reduce the taxes paid to the local municipal authorities during the year to arrive at the net rental income. (Note: In case some rent cannot be realised then such amount can be reduced from the total rent.)

Of this net rental income, 30% is allowed as a standard deduction. Further, you can also deduct the interest paid on the loan taken to acquire the said property to arrive at the income from house property that would be liable for taxation.

R RAJAGOPALAN (ADVOCATE) 10 May 2013

Allocation of the Income from House property between you and your mother depends on the shares of ownersip of the two co-owners,ie: your mother and you, for which the title deed for the land, the ownership agreements relating to the building , etc have to be seen.

The respective co-owner can claim credit for the TDS according to his/her share in the income from the property.

Whether the income from the commercial property should be assesseed under the 'Income from House Property' or under the head ' Profits and Gains of business' is also to be examined.