4 advantages of adding your spouse as a co-owner when buying a house

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Unlike Agarwal and Garg, many home buyers ignore the implications of co-ownership and therefore lose the benefits.

Buying a home is a big decision and a lot of effort goes into finding a suitable home that meets the needs of all family members. Since this is also a large amount, often the savings of a lifetime, it pays to be careful about every little detail surrounding the purchase decision.

Experts say there are many benefits to adding your spouse as a co-owner. “It makes sense to add the spouse as a co-owner, as it helps improve loan eligibility and provides tax benefits to both co-borrowers on interest and principal repayment. In addition, the succession of a condominium property is more fluid than the long process involved in the case of a single property, ”said Tarun Birani, Founder and CEO of TBNG Capital Advisors Ltd. Here are four advantages of owning a condominium home.

One of the major additional expenses that a buyer has to incur when buying a home is stamp duty and registration fees for registering title deeds in the buyer’s name.

However, “you may prefer that your wife’s name be the first owner, as it can help you save a lot of money to pay for stamp duty,” said Sonika Bharati, associate, AKG Advisory LLP, a law firm.

In many states, property registration stamp duties are higher for male buyers and lower for women. For example, in New Delhi, a woman has to pay a stamp duty of 4% compared to 6% for a man; if the property is purchased jointly in the name of a man and a woman, buyers must pay a 5% stamp duty.

Likewise, in Haryana, a man has to pay a stamp duty of 8% in urban areas and 6% in rural areas, while a woman has to pay 6% in urban areas and 4% in rural areas. rural.

Most real estate purchases are financed by mortgage loans. When granting a loan, credit institutions first determine eligibility, which depends mainly on the borrower’s income. Typically, loan eligibility is around five times the borrower’s annual salary. However, “if the borrower derives insufficient income, has a low credit rating or a low repayment rate, the involvement of a co-borrower is a blessing for the loan seeker and the lender is assured of a prompt repayment, “said Harshil Mehta, deputy general manager. and CEO, Dewan Housing Finance Corp. Ltd. “Financial lenders require all co-owners of a property to be co-applicants for the mortgage. However, not all co-applicants are necessarily co-owners,” added Mehta.

In case of co-applicants, the income of all borrowers is taken into consideration in determining loan eligibility and may increase the loan amount. For example, if your annual income is around ?? 10 lakh, you can get a loan of up to ?? 50 lakh. If your spouse also wins ?? 10 lakh per year, you can both borrow up to ?? 1 crore. In addition, “having a wife as a co-applicant could also allow you to obtain a favorable interest rate in several financial institutions. It could be your mother, your sister, your wife or your daughter, but they have to be the first buyers of a home, ”Mehta said.

The repayment of a home loan can give tax advantages to the two co-owners of a house.

The payment of stamp duty and registration fees gives the right to deduct up to a maximum of ?? 1.5 lakh under section 80C of the Income Tax Act, 1961. The repayment of capital during a year can be claimed up to the aggregate limit of ?? 1.5 lakh authorized under section 80C of the law. Interest paid on the mortgage can be deducted under section 24 (b) of the law up to a maximum of ?? 2 lakh per year, in the event that the mortgage is acquired for an independent house.

Co-borrowers who are also co-owners of the property can each claim the deduction separately up to the aforementioned limits, depending on their share of ownership. However, jointly, they cannot claim more than the actual amount of the mortgage loan repaid.

“It is always advantageous that both partners contribute equally when buying a property. This will help them achieve equal tax benefits and capital gains, ”Bharti said.

There are also other tax advantages. If you plan to rent the property, the rental income can be shared by the two owners and can be taxed at a lower rate. For example, if both owners win ?? 8 lakh per year and the property they jointly own in equal shares is leased to ?? 4 lakh per year, ?? 2 lakh each will be added to their income. In other words, their total individual income would be ?? 10 lakh each, which comes below the slab by 30%. In the same example, if the property belonged to only one of them, the total income of that individual would have become ?? 12 lakh, pushing the person into the 30% tax bracket.

In the event that the property is jointly owned by both spouses, as a co-owner or roommate with equal shares in the property, this can facilitate inheritance issues. From a legal standpoint, “doing it (the co-ownership) also ensures that the spouse has no problem when it comes to asserting their rights to the property in the event of the death of the other spouse,” Anuj said. Puri, President, ANAROCK Real Estate Consultants.

“In the event of the death of one of the spouses, there will not be a lot of stress and work to transfer on behalf of the surviving owner. It’s easy and saves you the transfer costs, ”Bharati said.

While there are many advantages to buying a home together with your spouse, remember that problems could arise if your relationship deteriorates.

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