# Deemed Owner — Section 27

Normally, house property income is taxable in the hands of the legal owner. However, Section 27 deems certain persons as 'owners' for the purpose of taxation under this head, even though they may not be legal owners. This prevents tax avoidance through technical ownership structures.

## Five Categories of Deemed Owners

### 1. Transfer to Spouse or Minor Child without Adequate Consideration

An individual who transfers a house property to his/her spouse (otherwise than in connection with an agreement to live apart) or to a minor child (not being a married daughter) without consideration or for inadequate consideration is deemed to be the owner.

### 2. Holder of an Impartible Estate

The holder of an impartible estate is the deemed owner of all properties comprised in the estate.

### 3. Member of a Co-operative Society / Company / AOP

Where a building has been allotted or leased under a house-building scheme of a co-operative society, company, or AOP, the member to whom such building has been allotted/leased is deemed to be the owner.

### 4. Person in Possession under Section 53A of the Transfer of Property Act

A person who has taken or retained possession of immovable property in part performance of a contract (typically where sale consideration has been paid but the conveyance/registration is pending) is deemed owner.

### 5. Lessee with Long-Term Lease (12 years or more)

A person who acquires lease rights in a property for a period of 12 years or more (whether originally fixed or by virtue of an extension clause) is deemed owner. Lease from month to month or for a period not exceeding one year is excluded.

Worked example

### Example 1

Question: Mr. A gifted a house to his wife Mrs. A in 2020 without consideration. The wife let out the property and received rent of ₹3,00,000 in PY 2025-26. Who is taxable?

Solution:

Under Section 27, Mr. A is deemed to be the owner because he transferred the property to his spouse without adequate consideration. Hence, the rental income of ₹3,00,000 is taxable in Mr. A's hands under 'Income from House Property' (not under clubbing provisions and not in the wife's hands).

⚠️ Common exam mistakes

Confusing Section 27 (deemed owner — taxed as house property income) with Section 64 clubbing (taxed but under the original head with attribution). For HP transfers to spouse/minor child, Section 27 applies first.
Treating short-term lessees as deemed owners. The 12-year threshold is strict.
Forgetting that transfer to a married daughter does NOT trigger deemed ownership (only minor child, not married minor daughter).

Bare-Act text Section 27 · Income-tax Act, 1961 · click to expand

Section 27: For the purposes of sections 22 to 26 — (i) an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter, shall be deemed to be the owner of the house property so transferred; (ii) the holder of an impartible estate shall be deemed to be the individual owner of all the properties comprised in the estate; (iii) a member of a co-operative society, company or other association of persons to whom a building has been allotted or leased under a house building scheme shall be deemed to be the owner of that building; (iiia) a person in possession in part performance of a contract referred to in section 53A of the Transfer of Property Act; (iiib) a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) by virtue of a transaction referred to in section 269UA(f) shall be deemed to be the owner of that building.

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