Properties in joint names have several benefits over the properties in single names and to attract such benefits one need to be aware of those. Generally, each potential client will a diligent studies on type of property she or he desires to buy, right from its pricing to the formalities and documents required for purchasing it. But, lots of us aren’t even aware of the benefits of buying property in joint names and what property’s joint holders will receive.
Income Tax Benefits
This is very crucial in terms of income tax benefits. Such benefits could only be enjoyed by the holder of the property. For example, if you have bought a property in the name of your wife and both of you sharing the EMIs payment, only your wife shall be able to claim income-tax rebate out of the EMIs amount paid.
Joint Ownership Benefit
So far, there’s no particular regulation that governs who can be added as a joint owner for a property to be in joint names. It may be anybody from near family like partner, youngsters, parents, brother or sister on your pals or commercial enterprise partners. It is usually recommended to buy a property in joint names over single name. In case you’re a bachelor, you should purchase it together along with your and your parent’s call as a property joint holder. In case you’re married, you could choose your partner or children as a joint owner. The property’s joint proprietors aren’t required to make a contribution in the direction of the price of the property.
In case of any unexpected mishap to either of the owners of the property, the property receives robotically transferred to the closing joint holders. As flats in housing societies are in huge demand under residential houses segment, the societies generally transfer the flat in the name of remaining joint holders without insisting on a no-objection certificate from other legal heirs to the remaining joint holder of the property; in case of death of any property holder which is jointly owned.
In case of home loans as well, the creditors additionally insist for co-debtors like close relatives, spouses, kids or parents so that during case of death of any of the applicants, the legal responsibility might be constant at the relaxation of co-debtors, In fact most of the of the lenders do not entertain the loan application in single name.
This advantage may be drawn without problems for joint properties. With the whooping charges of property, huge loan is required to undertake to acquire it and rebates can only be claimed for income tax purposes by the owner of the property only. The repayment of principal amount derives tax benefits under Section 80C and the interest amount gets the rebate under Section 24b. For example, if you take a loan of 50 lakhs for a residential property, the annual interest with the interest rate 9.50% shall be calculated as 4.75 lakhs.
The income tax act has levied a cap of Rs. 2 Lakhs per person that can be claimed for a rebate on account of interest for every financial year. In such a case, you shall be able to claim a maximum of up to Rs. 2L while if the property is joint-holding, then each holder can claim an amount of Rs. 2L on account of interest. Similarly, the repayment of the principal amount can be claimed up to 1.5 lakh each per annum under Section 80C.
So, in case you buy a property in joint names, each of the holders can claim 1.5 lakhs with the presumption which you don’t have any other expenditure or investment qualified under the aforesaid section.