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In addition to making an informed decision, property buyers are also working out the best mode of acquiring their immovable assets. Whether it’s choosing the best financing option for tax benefits or directly dealing with the seller to avoid brokerage, Indians are leaving no stone unturned. One such smart way is the decision to register the property jointly, with the spouse.
There are intangible benefits of joint registration of property like elevating the status of the wife in a patriarchal society, better bonding, long-term commitment, and trust between spouses. However, not many are aware of the financial advantages.
The budget to purchase property is determined by the loan eligibility, which has a specific limit depending on the income. In case of a joint registration, spouses can opt for a joint home loan. It shares the debt burden between two people and paves the way for a higher loan amount as two incomes will be considered. A joint home loan can be obtained by an applicant along with their spouse, parents or siblings.
Co-borrowers can enjoy tax benefits
According to Suraj Nangia, partner, Nangia & Co., “From a taxation point of view, a joint home loan is beneficial to all co-borrowers who can claim a tax deduction of Rs 1.50 lakhs for principal repayment under Sec 80C and Rs 2 lakhs for interest payment under Sec 24. In the case of two or more people taking a joint home loan, each of them can enjoy tax benefits under the Income-tax Act, in respect of the principal and interest paid during a year, on proportionate basis.”
Under section 80C, each joint owner is allowed a deduction of Rs 1,50,000 for principal repayment. They can also claim deduction on the registration charges and stamp duty charges that they have paid for, with total deduction not exceeding Rs 1,50,000. Additionally, they can also apply for deduction of housing loan interest from house property income, up to Rs 2,00,000 each. However, the deduction should not exceed the interest.
Stamp duty benefits for women borrower
Delhi, UP, Punjab, Haryana and Rajasthan, offer relaxations in stamp duty for women buyers. Punjab reduced the stamp duty charges from nine per cent to six per cent in 2017, for a limited period. It maintained that from April 1, 2019, urban areas would again invoke a stamp duty charge of nine per cent and the same would be six per cent in rural areas.
The stamp duty rate in Maharashtra, which was recently increased to six per cent from the previous five per cent, is uniform for both, men and women. However, the other states where stamp duty rates are lower for women include:
|State||For men||For women|
|Jharkhand||7%||Only Re 1|
|Haryana||6% in rural|
8% in urban
|4% in rural|
6% in urban
|UP||7%||Rebate of Rs 10,000 on overall charges|
|West Bengal||5% in rural|
6% in Urban
(Plus 1% if property cost >Rs 40 lakh)
Note: List is not exhaustive – charges are indicative and subject to change.
Additionally, many banks such as SBI, HDFC, ICICI, etc., offer discounts on home loan interest rates to women as compared to men. This varies from bank to bank and goes up to nearly one per cent.
Easy succession of jointly-owned property
In the case of single ownership, transfer of property can be lengthy and time consuming. For instance, after the death of a New Delhi resident, his family members found that the flat they lived in, was solely owned by the deceased. The procedure to get the documents in the successor’s name involved excessive conformation to regulations and rules.
“Many people suggested shortcuts involving unethical practices. Finally, my sister took possession of the property after extensive paperwork, mental torture and time,” recounts the brother-in-law of the deceased.
If only the property was jointly owned, these hassles could have been avoided.
“Joint registration of property is always advisable as the spouse is always the successor. This will prevent unwarranted problems in the future after the demise of any person,” explains advocate Narendra Vishnu Sankpal, RV Sankpal & Associates.
What is the difference between co-borrower and joint owner?
A co-owner is always a co-borrower in case of a joint home loan. However, a co-borrower need not compulsorily be a co-owner of the property. A co-borrower is eligible for tax benefits under income tax laws only if he is also that co-owner of the property.
Can you split ownership of a house?
In a scenario where the property is registered in the joint names of a married couple and both are also co-borrowers, the court will decide the contribution made by each party and divide the asset accordingly.
What are the advantages of joint ownership?
Basically, there are four major advantages of joint ownership which include better home loan eligibility, double tax benefits, stamp duty benefit for woman homebuyer and easy succession of the property.
What is the difference between co-owner and joint owner?
Co-owners mean all the owners of a property. If the property is owned by more than one person, it is called joint ownership.