Properties in joint names have numerous benefits over the properties in single names and to draw such benefits one must be aware of those. Generally, every prospective buyer does a diligent research on 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 property’s joint holder’s 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 is no specific law that governs who can be added as joint owner for a property to be in joint names. It can be any one from close relatives like spouse, children, parents, brother or sister to your friends or business partners. It is always recommended to buy a property in joint names over single name. In case you are a bachelor, you can purchase it with your and your parent’s name as a property joint holder. In case 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.
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 residential properties 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 lenders also insist for co-borrowers like close relative, spouse, children or parents so that in case of death of any of the applicant, the liability could be fixed on the rest of co-borrowers, In fact most of the lenders do not entertain the loan application in single name.
This benefit can be drawn easily for joint properties. With the whooping prices 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 rebate on account of interest for every financial year. In such a case, you shall be able to claim maximum 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 principal amount can be claimed up to 1.5 lakh each per annum under Section 80C.
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.