joint ownership

The Top 4 Benefits of Joint Ownership: How to Boost Your Loan Eligibility, Reduce Tax Liability, and More

Let us first understand the need for joint ownership. Purchasing a residence, be it a house or an apartment, necessitates a substantial sum of money, which can prove to be challenging to amass within a limited period for an average salaried individual. Even though it’s feasible to accumulate the necessary funds by saving for years, the scourge of inflation impedes most individuals from acquiring their desired abodes during their prime years. Additionally, home loans may not always grant an adequate sum of money to purchase the home of one’s choice.

Hence, to acquire a desirable abode before reaching the age of 30, opting for joint ownership of the property with family members stands out as one of the most viable options. By doing so, individuals can co-own a property with one or more family members. However, is it a prudent decision? Familiarizing oneself with the advantages of joint ownership of house property can assist in making an informed decision.

In the realm of joint property ownership, one of the most intriguing aspects is the question of who qualifies as a potential co-owner. Remarkably, the law offers an exceedingly broad definition of this category, wherein virtually anyone can fit the bill. Whether it be parents, siblings, children, spouses, or other individuals, the range of eligible parties is truly extensive.

Furthermore, it’s essential to note that a lack of personal income is not a barrier to participation in joint property ownership. Even if an individual is not a significant earner, they can still be a co-owner alongside you. This dynamic presents a unique opportunity for one to shoulder the financial burden of ownership while still reaping the benefits of joint property ownership.

The prospect of co-owning a housing property with a family member or friend may initially seem daunting. Yet, upon closer inspection, it becomes apparent that the benefits of such an arrangement are both compelling and multifaceted.

In truth, joint ownership of house property can yield numerous advantages that may be difficult, if not impossible, to attain through alternative means. Therefore, it is worthwhile to explore the top four benefits that one can expect to experience through the pursuit of joint property ownership.

Boosts loan eligibility

Among the myriad advantages of joint property ownership, one of the most compelling is its ability to bolster one’s eligibility for a home loan. When seeking a housing loan, lenders typically scrutinize one’s gross monthly income to determine the maximum amount of financing available. For example, an individual earning Rs. 80,000 per month would be eligible for a significantly higher loan amount than one earning Rs. 40,000 per month.

Consequently, individuals seeking a higher loan amount may benefit from applying for a housing loan with a family member possessing a robust monthly income. By explicitly disclosing to the lender that the property will be jointly owned, the risk associated with sanctioning a larger loan amount is mitigated. Ultimately, such an arrangement allows for greater access to financing, making the dream of homeownership a reality.

Tax benefits of joint ownership

Jointly owning a house with a family member provides a wealth of benefits, one of which is the opportunity to reap substantial tax advantages. Under Section 80C of the Income Tax Act, 1961, both co-owners are entitled to a tax benefit of up to Rs. 1.5 lakhs on the principal repayment of the home loan. In addition, Section 24 of the same Act permits both co-owners to claim a deduction of Rs. 2 lakhs on the interest repayment of the housing loan, resulting in a significant reduction in taxable income.

But that’s not all; the tax benefits of joint property ownership extend beyond the loan repayment. Both co-owners can also claim a deduction on the stamp duties and registration fees, provided it doesn’t exceed the Rs. 1.5 lakhs limit. In essence, by taking advantage of the tax benefits associated with joint property ownership, individuals can significantly reduce their tax liability, freeing up funds to invest in other areas of their life.

Easy transfer of property 

In recent years, there has been a marked shift towards purchasing apartments rather than independent homes. Experts in real estate and law are increasingly advocating for joint ownership of apartments with family members. This strategy has the added benefit of easy property transfer in the event of one co-owner passing away due to old age or unforeseen circumstances. The remaining owner(s) can inherit the property without encountering any legal complications, subject to the necessary registration formalities with a qualified property lawyer. By embracing joint ownership, individuals can minimize the risk of any future disputes and ensure that their family’s financial well-being remains secure.

EMIs are easier 

When it comes to purchasing a home, joint ownership offers several advantages that go beyond simply increasing your chances of securing a substantial home loan. One such benefit is the ease with which you can manage your monthly installments. By opting for a home loan with one or more co-owners, you can split the total monthly EMI into smaller, more manageable portions. The ratio of these installments can be decided in advance, giving you greater flexibility and control over your finances. With joint ownership, you can enjoy the peace of mind that comes with a more equitable and stress-free approach to repaying your loan.

After considering the various benefits and drawbacks of jointly owning a house property, you should have a clear understanding of whether this is the right decision for you. By having a co-owner, you can increase your borrowing power and make your EMI payments more manageable. Additionally, you can enjoy substantial tax benefits and easily transfer ownership in the event of an unforeseen circumstance.

Despite these benefits, joint ownership does have its downsides. For example, it can cause a delay in home loan approval, and it may negatively impact your credit score if the other co-owner fails to make their payments on time.

Therefore, it is essential to carefully evaluate your options before deciding to pursue joint ownership of a house property. By doing so, you can make a well-informed decision that is in your best interest and ensures your financial stability in the long run.

Leave a Comment

Your email address will not be published. Required fields are marked *