I and my husband are planning to buy a commercial property by the name of his mother (house-wife). We are further planning to register a gift deed by the name of our 6 years old son in order to avoid family dispute in future. 1- Is this possible at all ? 2- If yes, will rent from the property in future be taxable on either my or my husband's income? 3- Is there any better approach ? Please suggest. Thanks in Advance
1) always purchase property in your names only
2) if you purchase property in name of mother on her demise your husband siblings would have share in said land
3) once gift deed is executed in favour of son he would be absolute owner of property
4)such property cannot be sold without court consent
Dear Concerned,
Any such property purchased by your money under your mother in laws name will fall under Benami property however this can still be admissible being mother of the person paying for it.
Gift deed in favor of a minor will not be valid and only a natural guardian will be able to accept the same on behalf of the minor.
Yes the income from rent is taxable to the person receiving the rent - you can not receive rent in your son's name and if its on your mother in laws - it will be taxable
As this entire exercise seem to be thought of to evade the income tax liability - please note the income tax on income from interest can not be evaded and has to be paid - in such situation better to buy the property on your name directly rather then some ones else.
Best of luck
1. Yes you can buy the proeprty in the name of your mother in law who later cna gift the proeprty to your minit son.
2. It is not taxable to your husband.
3. You can buy the property in the name of your minor son though your husband can be asked to give income proof.
4. However you will have to pay the stamp duty twice . Once you purchase the property you will have to pay and again when your MIL gift the same to your son.
1. It is a long route, why dont you purchase the property on the minor's name directly by appointing her as guardian or one of you as guardian to the minor buyer.
2. Minors can earn an income from bank accounts, fixed deposits or other investments made in their name by the parents. Any Income that accrues or is paid to a minor is clubbed with the Income of the parent under section 64(1A). ‘Clubbing’ means such Income gets added to the parent’s income and is taxed just like it is the Parent’s own income. So in case you are hoping to save tax by investing in the name of your children – such income will be added to your Income and taxed accordingly.
If both spouses are earning –The Income of the minor shall be clubbed with the income of the parent, whose total income (before inclusion of the minor’s income) is greater.
In case the marriage does not exist, the income of a minor shall be clubbed with the parent who maintains the child.
If both the parents are not alive the income of the minor child is not clubbed with the guardian, a separate income tax return is filed for the minor.
3. Thus since it becomes a long and tedious route, it is advisable that the property may be purchased on the minor's name itself who is the end beneficiary,
