Buying a property is one of the biggest financial decisions most people make in their lives. It requires careful planning and a significant financial commitment. To make it more affordable, many buyers choose to purchase property jointly with a spouse, family member, or business partner.
In some cases, joint ownership may also help buyers benefit from lower stamp duty or home loan rebates, helping reduce the overall cost. However, while it can offer financial advantages, joint ownership also comes with certain limitations and responsibilities that should be considered before making a decision.
Types of Joint Ownership
Property can be jointly owned in different ways, each with distinct legal implications. Under 'tenancy in common', co-owners hold separate shares that can be transferred independently, and an owner's share passes to their heirs upon death.
In a 'joint tenancy', co-owners hold equal shares, and the deceased owner's share automatically passes to the surviving owners through the right of survivorship.
'Tenancy by the entirety', available to married couples, also provides survivorship rights and protection from the individual debts of one spouse. 'Community property', recognised in some states, treats assets acquired during marriage as jointly owned, with each spouse holding a 50% interest.
In India, Joint Hindu Family Property is collectively owned by members of a 'Hindu Undivided Family' (HUF) and managed by the Karta on behalf of the family.
Additionally, Coparcenary, a concept under Hindu law, grants an interest in ancestral property by birth. Following a 2005 amendment, daughters enjoy the same coparcenary rights as sons, including the right to seek partition of the property.
Shared Ownership, Shared Costs: How Joint Ownership Can Benefit You
Purchasing property requires a significant financial investment, which can be burdensome for an individual buyer. Joint ownership allows mutual sharing of the financial burden. It also improves the purchasing power of buyers, who can now target bigger or more premium properties. At the same time, it allows owners to potentially earn income by leasing the property.
Owning a property involves constant management, including its repairs and maintenance. Joint ownership ensures the responsibility is distributed.
Some states even offer a stamp duty rebate to women co-owners or couples who register a property jointly.
In the case of married couples or family members, if there is a provision, the property often automatically transfers to the surviving owner(s) when one co-owner dies. This streamlines the process of inheritance.
However, joint ownership has its own disadvantages.
Risks of Joint Property Ownership
Involvement of multiple individuals during the process of property ownership comes up with a lot of paperwork, which can extend the processing time. Any discrepancy further delays and complicates the process.
Because of co-ownership, an individual cannot make decisions related to the property independently and requires the consent of co-owner(s). This may lead to disagreements that may evolve into disputes. In the case of family, this negatively affects personal relationships.
In property ownership involving a joint home loan, all co-borrowers are responsible for repayment. Hence, if any individual delays or is unable to contribute to EMIs, the credit score of all applicants can be negatively affected.
Tax Benefits
Under Section 26 of the Income Tax Act 1961, when a house property is owned by two or more individuals whose shares are definite and ascertainable, they are not taxed collectively. Instead, the income from the property is calculated individually for each co-owner based on their respective share.
According to Section 24(b), for a self-occupied property, each co-owner can individually claim a deduction of up to Rs 2 Lakhs per year specifically on the interest paid toward a home loan.
Additionally, under section 80C, each co-owner can deduct up to Rs 1.5 Lakhs per financial year for the repayment of the 'principal' portion of the loan.
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About the Author: TOI Real Estate Desk - The TOI Real Estate Desk is a focused team of seasoned journalists and market watchers dedicated to decoding the ever-evolving property landscape for The Times of India readers. With a sharp eye on trends, policy shifts, and market movements, the team brings clarity to one of the most significant investment decisions in people's lives. From expert insights on buying, selling, and investing to deep dives into infrastructure developments, home design, and sustainable living, the news here offers a comprehensive view of the real estate ecosystem. Whether you're a first-time homebuyer, a seasoned investor, or simply exploring the market, the TOI Real Estate Desk is your trusted guide to making informed property decisions.
