An ordinary salaried worker finds it challenging to save up the large sums of money necessary to purchase a residential home in a timely manner. Even though years of saving could yield the necessary sum, most people won’t be able to purchase their ideal home when they are young due to inflation. Additionally, a home loan won’t provide you with enough money to buy your ideal home because the authority won’t be able to approve the necessary amount based on an individual’s salary if the property is expensive.
Therefore, joint ownership is your best option if you want to purchase a home in your early 30s. You may own a piece of property jointly with one or more members of your family. Before making a final decision, let’s talk about all the key points and advantages of joint ownership of a residential property.
Joint ownership or joint tenancy refers to when two or more owners jointly own a piece of property. Shares automatically pass to the remaining joint owner via the right of survivorship upon the death of one or more owners. The property is available for use and enjoyment by each co-owner. A joint tenancy can only be created if certain conditions are met. Time, interest, title, and occupancy are the usual prerequisites for joint tenancy. In other words, the owners must simultaneously acquire joint tenant status in the same document, have equal rights and interests, and take ownership of the property.
There are no restrictions on who can hold a joint ownership title to a residential property. It could be an elderly person, a parent, a sibling, a child, a spouse, or even a close friend. Income is not a factor in joint ownership. Co-ownership of the property is possible for both those who are financially independent and those who are not. You can take care of your individual financial obligations and still enjoy the advantages of shared property ownership.
Being an owner or co-owner of a residential property has many advantages. Here are a few of them:
Higher Loan Eligibility: One of the biggest benefits of combined home ownership is an increase in loan eligibility. Lenders decide the maximum loan amount they can offer when you apply for a home loan by looking at your gross monthly income. It is usually advantageous to apply for a home loan together with a family member who has a respectable monthly salary in order to acquire a larger loan amount. The lenders must be made aware of your intention to apply for a loan with a co-owner. Lenders will feel fewer risks of approving the larger loan amount in this manner.
Tax benefits: Both the primary applicant and the co-applicant are eligible for the tax benefits of Rs. 1.5 lakh on the principal repayment of the mortgage under Section 80C of the Income Tax Act of 1961. According to Section 24 of the same statute, the owner and co-owner may each deduct up to Rs 2 lakh in taxes from the interest paid on the mortgage. Additionally, as long as the margin does not exceed Rs 1.5 lac, both joint tenants are eligible to claim a discount for the stamp duties and registration fees.
Easy Property Transfer: Nowadays, rather than purchasing or building individual houses, more and more Indians are tempted to purchase brand-new flats. Because of this, real estate and legal professionals advise purchasing residences alongside one or more family members. By doing this, the property will be legally transferred to the surviving co-owner in the event that one co-owner passes away due to old age or any other cause. Simply registering the unit again with a real estate attorney is all that is required.
Easier Home Loan Repayment: As you are already aware, purchasing a home with joint ownership increases your likelihood of obtaining a loan with a larger principal amount and a bigger loan amount. The advantages don’t stop here, though. It is simpler for you to make the monthly EMI payments when you obtain a loan with one or more co-owners. Only a percentage of the total monthly instalment will need to be paid. Additionally, you and the other co-owner can agree on the ratio. In this manner, you will just need to pay a portion of the EMI at your convenience.
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Conclusion: Joint ownership offers several tax advantages under Sections 80C and 24 of the Income Tax Act of 1961, as well as the ability to borrow more money for a house loan and make EMI repayment simpler. Additionally, it makes it simple to transfer full ownership of the property to any co-owner.