Buying a house is a once in a lifetime decision, where in generating capital or resources in a short period of time can be very difficult. Usually budget constraints, home loan eligibility and inflation create hurdles in fulfilling the dream of having one’s own property or house. So, if one wants to buy a nice home at the early stage of life, joint ownership of the property is one of the best ways to go. With this, one can own property together with one or more of family members.
Let us understand the benefits of having joint ownership of the house / property:
Joint Owner: Who is eligible?
There are no limitations on who can be a joint owner of a housing property. It can be absolutely anyone, whether it’s senior citizen parents, siblings, children, spouse or even a close friend. Income does not play a role when it comes to the co-owner. A person now earning an income can also become a co-owner of the property.
Merits of Co-Ownership of the Property/House:
There are several benefits in having or becoming a co-owner of a house / property. Some of them are as follows:
1. Increased Loan Eligibility
Getting a boost in home loan eligibility is one of the biggest benefits of joint ownership of a house. When you apply for a housing loan, the lenders check your gross monthly income to determine the maximum loan amount they can lend. In order to secure a higher loan amount, it is always beneficial to apply for the home loan along with a family member who has a handsome monthly income. You must inform your lender about your plan to have a co-ownership of the house / property while applying for the home loan. This way, it becomes less risky for the lenders to sanction higher loan amounts.
2. Tax Benefits:
The main applicant and the co-applicant both can avail tax benefits of INR 150000 on principal repayment of the home loan under section 80C of the IT Act, 1961. Both, the owner and the co-owner can also claim a tax deduction amounting to INR 200000/- on the interest repayment of the housing loan under section 24 of the same Act. Also, both the owner and the co-owner can claim a deduction on the stamp duties and the registration fees as long as it doesn’t exceed Rs. 1.5 lakhs margin.
3. Easier Property Transfer Process:
In a worst case of the death of the owner / co-owner, the right of the property/house can be easily transferred fully to the alive owner/co-owner without any legal hassle. A simple fresh registration application of the property is required in such cases.
4. Easier repayment of Home Loan:
Getting a home loan with one or more co-owners makes it easier to pay the EMIs. One will only have to pay a portion of the total monthly instalment. One can also decide the ratio with the other co-owner(s). This way, one will only have to pay a fraction of the EMI based on the mutual understanding with the co-owner(s).
Conclusion:
The joint ownership will allow one to borrow more money as a home loan, will make EMI repayment easier, and gives generous tax benefits under Section 80C and 24 of the Income Tax Act, 1961. It also allows to transfer the full ownership of the property to any co-owner with ease.