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Estate planning · HUF

HUF as landlord: rental income and property tax strategy

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  1. Facts

    If HUF owns a property (ancestral or purchased from HUF funds), all rental income belongs to HUF, taxed at HUF's slab rate. The HUF can also claim the ₹2L home loan interest deduction under Sec 22, Income-tax Act 2025 (old Sec 24) on the let-out property.

  2. Provisions and law

    • Income Tax Act 1961, Sec 22-27 | Sec 24 (₹2L interest deduction)

  3. Analysis

    A high-earning individual (30% slab) who shifts rental income into HUF effectively pays 5% tax on the first ₹3.5L of rental income instead of 30%. Annual saving: ₹87,500 on ₹3.5L rental income alone.

  4. Conclusion

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Rental income, rent agreement and TDS on rent under Sec 393 (old 194-IB)

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