Joint Ownership of Property: Meaning
Jointly owned property is any property that is held in the names of two or more parties. These parties may be spouses, business associates, or any other group of people who have a shared interest in owning property. When two parties own property together, it is considered to have matrimonial status. Jointly owned property can be held in a trust, joint tenancy, tenancy by the entirety, or community property.
Joint Ownership of Property: Benefits
Joint ownership of property has numerous benefits over property in single names, and to draw such benefits, one must be aware of them. Generally, every prospective buyer does diligent research on the kind of property he or she wants to buy, right from its pricing to the formalities and documents required for purchasing it. But many of us are not even aware of the benefits of buying property in joint names and what the 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 and your wife have joint ownership of property and both of you share the EMI payment, only your wife will be able to claim an income-tax rebate out of the EMI amount paid.
Joint Ownership Benefit
So far, there is no specific law that governs who can be added as a joint owner for a property to be in joint names. It can be anyone from close relatives like spouses, children, parents, brothers, or sisters to your friends or business partners. It is always recommended to buy a property in joint names rather than single names. If you are a bachelor, you can purchase it with your and your parent’s names as a property joint holder. If you are married, you can opt for your spouse or children as a joint owner. The property’s joint owners are not required to contribute towards the payment of the property.
Claiming Benefit
In case of any unforeseen mishap to either of the owners of the property, the property gets automatically transferred to the remaining joint holders. As apartments in housing societies are in huge demand under the residential properties segment, the societies generally transfer the flat in the name of the 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 the death of any property holder that is jointly owned.
In the case of home loans as well, the lenders also insist on co-borrowers like close relatives, spouse, children, or parents so that, in the event of the death of any of the applicants, the liability could be fixed on the rest of the co-borrowers. Most of the lenders do not entertain loan applications in a single name.
Loan Benefit
This benefit can be easily drawn from joint properties. With the exorbitant prices, acquiring property necessitates a large loan, and rebates may only be claimed for income tax purposes by the property’s owner. The repayment of the principal amount derives tax benefits under Section 80C, and the interest amount gets a rebate under Section 24b. For example, if you take a loan of 50 lakhs for a residential property, the annual interest with an interest rate of 9.50% shall be calculated as 4.75 lakhs.
The Income Tax Act has levied a cap of Rs. 2 lakh 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. 2 lakh, while if the property is joint-holding, then each holder can claim an amount of Rs. 2 lakh on account of interest. Similarly, the repayment of the principal amount can be claimed up to Rs. 1.5 lakh per annum under Section 80C.
Bottom Line
So, if you purchase a property in joint names, each of the holders can claim 1.5 lakhs with the presumption that you don’t have any other expenditure or investment qualified under the aforesaid section.
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