I and my wife jointly own a flat in Mumbai; she is the second owner. Rental income is ₹ 50,000 a month, of which ₹ 8,500 is maintenance charge. Can the entire amount be shown as my wife’s?—P. Dhrub Kumar
Rental income earned is taxable in the hands of each co-owner, in proportion to the share owned. While you and your wife are the legal owners from a tax perspective, the proportion of ownership would be determined based on amount funded by each person for the cost of property. We highlight here that there has been a recent judicial precedent suggesting that the co-ownership will be determined based on the agreement. So the proportion of ownership would be case specific and subject to various factors like names and share mentioned in agreement, funding of costs, etc. While computing taxable rental income, a standard deduction for repairs and maintenance can be claimed at 30% of the net rental value (gross rent minus actual municipal taxes paid), irrespective of the actual expenditure incurred. Interest paid on a housing loan can be offset from the net rental value to determine the taxable rent.
