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.
Loan options for couples
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.
Tax benefits for co-borrowers
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
Some states encourage women to own property individually or jointly through lower stamp duty rates by 1 to 2%. For instance, in Delhi, a woman has to pay a stamp duty of 4% and a man has to pay 6% of the market value. In Rajasthan, a woman has to pay 4% as stamp duty whereas, a man has to pay 5% of the market value.
In Maharashtra, there is a proposal to levy one per cent surcharge on stamp duty for new home buyers. This is to finance other infrastructure projects in the city. Although this is still in a proposal stage, it has gained negative acceptance, because most people consider it to be unfair. Moreover the proposal has come, at a time when the real estate segment has just begun to emerge from a slump.
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.