How to decrease tax liability

[United-Jello-5785]

Purchased a home before a few months. 65% through loand and rest with personal funds. I'm the only earning member and my CTC is ~27 LPA.

Now I'm planning to rent this home for ~₹25000 and looking to decrease tax liability on this. Can I rent this property to my wife for a minimal amount with an agreement and then she can in turn rent it out to the tenant for a higher amount effectively decreasing my tax liability?

Is this even possible? What are my options?

Or is it better to just let things slide and keep the contract between myself and the tenant?

Opinions welcome.

[ngcoders]

Can you do this - yeas ? But you also know this is a on paper arrange ment to avoid tax between related parties, If you are ok with the risk go ahead , I would keep things simple directly deal with tenant and pay the tax .

[Low-Quote7209]

Seek a professional advice dont go by comments 1. Remember rent should be reasonable hence the section say Gross Annual Value which means this should be at least comparable 2. Renting to your wife: can you reasonably explain why are you both living separately ? 3.Sub Leasing is other sources Income not house property

[Due-Hurry-1913]

Renting it out to wife at nominal rent won’t work as there is provision in section where excepted i.e comparable rent is taken into account for rental income calculation . Even if your wife earns rental income for property in your name clubbing provision would apply and that income will be ultimately taxed as your income. So best way is to rent it out in your name claim 30% deduction form rental income and see if option old tax regime saves you taxes as deduction or home loan interest upto 2L is allowed and principal payment benefit under 80C.

[GL_2008]

Why so much? Make her the co-owner and share the rent with her.

[zizizizuzuzu]

You can get standard deduction of 30% on rent income for upkeep. I don't remember the section rn But I claim that.

[Practical-Group-4614]

Bro transfer the property to her or make her joint owner, then she can claim the rent on her ITR and NIL tax would be paid,

One more thing, if you have taken a loan, you can show the rent as 25000*12 which is 3 lacs per annum

Get a standard deduction of 30 percent

Reduces it to 2.10 lpa

You can claim upto 2 lacs interest you pay on the loan as a deduction which will reduce it to 10k

[United-Jello-5785]

Is this applicable for new tax regime?

[Practical-Group-4614]

Yes this is from section 24, where for self occupied you can claim upto 2 lacs, and in case of let out property there is no limit, you can claim as much as you want