The house can be sold only if both the co-owners are ready for it. As both the co-owners can avail the tax benefits so whenever the house will be sold both has to pay tax on the capital gains earned by them. Blog: http://www.gorelations.com/blogs/2559/27037/how-to-add-co-owner-to-your-property Apply For Loan: https://financebuddha.com/home-loan Facebook :https://www.facebook.com/financebuddha Twitter:https://twitter.com/financebuddha
The other benefit of becoming a co-applicant is the tax benefit. Both the co-applicants can avail tax benefit on their contribution towards the home loan repayment provided they both are co-owners too. Above all when you make a co-applicant as a co-borrower in enhances the emotional value which cannot be measured by monetary means. Rajesh, a resident of Pune, purchased a home on a home loan three years back. In that home loan, Rajesh and his wife Neha both is co-applicant. Though both were co-applicant, the ownership of the home was in the name of Neha only. Rajesh was only co-applicant but not a co-owner. Neha was a homemaker and the total home loan EMI was deducted from Rajesh's salary only. Everything went well until Rajesh's salary reached 30% tax slab. A good share of his salary was about to go to Govt. as income tax. He reached to the accounting department of his company and asked what can be done to get the money back through income tax returns. The accounting officer suggested him that he can claim tax benefit on home loan repayment up to 3 lakhs per financial year. He came to know that though he was paying the home loan EMI from his salary, he is not eligible for tax deduction as he is not a co-owner. This was one of the biggest shocks which he got. If his wife were employed then tax benefits for loan repayments are split in the ratio of the share in the home loan. But unfortunately, that can not happen now. Rajesh reached housing society of the apartment put an application to add his wife Neha as a co-owner. Another shock was waiting for him in the form of the reply of the housing society. Rajesh got to know the adding a co-owner to the property is a lengthy process which demands lots of paperwork. This has to be done in the office of property registration which will cost from 80k to 1 lakh. The mortgage deed of the property will have to be redrawn. The new owner of the home will have to pay additional stamp duty and registration charge along with the bank’s processing fee which will be a costly deal to do. A co-owner of a property will, by default, become the owner of 50% equity of a home. But there are exceptions too. One can mention the proportion of the ownership between the two individuals. Here Is How One Can Add A Co-Owner Sale Deed- you can sale the portion of the property to the other person who will become the co-owner of the property. Once the sale is done successfully, one can get himself registered as a co-owner by paying the necessary charges. One has to pay the registration charges. The present registration charge of a property typically starts from 5-12.5% of the property value. Along with that one has to pay the stamp duty charges which again starts from 2% of the property value. So, according to the market value of the property, one has to pay charges to the Government. But paying to the government is not enough; one has to pay the processing fee to the lender too.
Gift Deed- One can give the ownership of the property by gifting it to someone. if you want to gift a share of your property, you will need to execute a gift deed on a stamp paper at the property registrar's office. Again the thing to be noticed is that a gift to a relative is not taxable in India. If the gift goes to a non-relative, the value of the house is treated as income and an income tax will be applicable according to the income tax rules for the relevant year. The registration charges and the stamp duty charges are lower than a sale deed. One has to pay a stamp duty charge which is generally 2% of the value of the property, along with 1% registration charge. The Tax Saving on Home Loan which is taken jointly is possible only if both the coapplicants are co-owners too. A co-owner of a property has the authority to decide whether the house will be used for the residential purpose or to be used for commercial purpose. The house can be sold only if both the co-owners are ready for it. As both the co-owners can avail the tax benefits so whenever the house will be sold both has to pay tax on the capital gains earned by them.