Deemed Owner in the case of Income from House Property

Deemed Owner in the case of Income from House PropertySection 27 of income tax act talks about deemed owner for the purpose of income from house property.

Although you are not the owner of a building in real sense the rental income can be charged in your hand if its proved that you are the deemed owner of the building or land appurtenant there to.

For income tax purpose a person in following cases will be treated as deemed owner and is liable to income tax for house rent in the same manner as a real owner. 

Deemed Owner

  • Gift or transferred for inadequate consideration

If you have transferred your building property to your spouse or minor child for inadequate consideration then you will be treated as the deemed owner of such building property and house rent from such property will be charged in your hand.

If you have transferred your house property to your spouse in connection with an agreement to live apart then this provision of deem ownership will not be applicable and you will not be treated as owner of the house. The house rent out of such building will be taxable in the hand of such spouse.

You can transfer your house property to your married daughter for inadequate consideration. If you do such kind of transfer your married daughter will be the owner not you and house rent from such property will be taxable in your married daughter’s hand.

  • Holder of impartible estate

The holder of an impartibly estate will be the true owner for the purpose of income tax even though the house is legally owned by some one else.

Example: A HUF in India holds property on behalf of all the members of such HUF and taxable as a Hindu Undivided Family. Where a house is legally owned by a member of such HUF then the HUF will be treated as a deemed owner as such HUF is jointly holds the house property of such member and the house rent will be taxable in the hand of HUF.

  • Cooperative society member

If a member of a cooperative society has been allotted a house property under a house building scheme of the society then such member who has been allotted the house property will be treated as owner not the cooperative society. Same concept will be applicable for a company or any other society.

  • Section 53A of Transfer of Property Act

If you meets the provisions of Section 53A of transfer of property act then you will be treated as a deemed owner. Under this section you will be deemed as owner of the house property even though the registration process has not been carried on and you are in possession of the house property.

  • Long term lease

If you have taken a lease for more than 12 years then you will be treated as a deemed owner of the house property.

In the case of deemed owner, the deemed owner will be liable to pay tax on the house rent of the property not the legal owner.

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