With more than 1.4 billion people, owning a property in India is a significant achievement. Now, in a trillion-dollar economy with modern infrastructure, high income, intricate taxes, and futuristic growth, Joint ownership offers a way to combine multiple individuals or partners to buy a property.
Joint ownership trends have been part of the traditional joint family heritage in India. Although this resulted in many disputes, this trend of multiple owners has additional benefits for sharing responsibility, taxes, planning, and income generation.
This blog will briefly explain Joint Property Ownership in India and its pros and cons.
Let’s start with a basic explanation!
What is Joint Property Ownership?
Joint Property Ownership, or co-ownership, is a legal status for two or multiple owners owning a specified property.
As per law, there are no rules for who can be a co-owner of property in India. They can be brothers, spouses, sisters, siblings, or any business partner who can come together to buy a property.
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Types of Joint Property Ownership:
There are different types of Joint Property ownership available in India.
1. Joint Tenancy
Joint tenancy defines equal owner rights between individuals with an undivided interest in the property. By virtue, this type includes the right of survivorship, i.e., if one co-owner passes, their share gets passed to the surviving co-owners equally.
2. Tenancy in Common
Here, all co-owners can have a specific and separate share in the joint ownership of the property. Each owner has the right to sell, transfer, or mortgage their part of the share to their benefit. If the owner passes away, the family survivor gets a share of their property.
3. Tenancy by the Entirety
Here, the ownership is given to married couples with rights for survivors. This type protects the property from any individual debt and allows the surviving spouse to own the entire property if one dies.
4. Community Property
This type represents joint ownership only in marriage, with each getting a 50% share, such as property acquired during the marriage.
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Laws of Joint Ownership and Joint Property Rules
As per the Indian law, section 44 deals with all the rules and regulations for the Indian Transfer of Property Act, which deals with co-ownership of property. All joint property rules, rights and responsibilities, maintenance & management, and resolving conflicts come under section 44 of the Property Act.
Pros of Joint Property Ownership:
Joint ownership comes with several benefits, which we will discuss now.
1. Tax Benefits
With Joint Ownership, one of the key benefits is tax deductions. As per the government, section 80C of the income tax, co-owners are given a separate benefit of 1.5 Lakhs and 2 Lakh on the principal & interest paid for the property. However, each individual has to pay taxes separately for all the transactions.
2. Increased Loan Eligibility
With two or more individuals involved in Property ownership, loan eligibility increases for combined owners. These enhanced loans will aid you in leveraging the overall financial cost of the property.
3. Easy Property Transfer
Joint property laws and regulations have been refined to provide a complete structure for efficiently transferring the property. Especially with different types of joint ownership, a property deed can help the owner to name an heir for their property.
4. EMI Management
Loan repayment via EMI management adds to the benefits of Joint ownership. Co-owners can help each other by paying the amount in tandem to avoid any financial troubles.
5. Payment Flexibility
With joint ownership, you can divide the total payment across all the owners as per their share. Thus adding the benefit of cost-sharing capital among owners to reduce the burden on the overall property value.
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Cons of Joint Property Ownership:
Yes, there are a few cons associated with Joint Property Ownership. And we are going to study these in detail.
1. Documentation Process Delays
With multiple owners for joint ownership, all the documentation and processes often get delayed by government departments.
2. Impact on Credit History
With a combined Bank loan, even if one or more owners miss the repayment. All the involved parties will face an impact on their credit history.
3. Lack of Control
Co-owners can develop different ideas or thoughts on a property regarding its current status, buying or selling, maintenance, and future vision. These confusions can hamper the relationship between owners, thus leading to potential conflicts.
4. Decision-Making Challenges
Joint ownership also throws decision-making challenges, with multiple owners having different ideas for their property share. Any difference in maintenance cost, selling, or future expansion of the property adds more confusion for co-owners.
5. Potential Conflicts and Disputes
One of the critical challenges with Joint ownership is the rise of potential conflicts and disputes. Omaxe is one of the best real estate companies in India, with several top residential and commercial buildings across the states. You can connect with our professionals to start your investment journey for the future.
Also Read: What is a Title Deed of Property?
Conclusion
With its long cultural heritage and historical tradition, Joint property ownership is still prevalent in this modern age.
Joint Property is still a prevalent way to invest in real estate in India, with all benefits and tax relaxations. Especially with some states offering extra benefits for female owners, so married couples choose joint property ownership respectively.
With the potential for conflicts and disputes, joint property can have a negative impression. Still, joint ownership plays a crucial role in large businesses when two companies come together to lower risks and manage skills.
FAQs
1. What is the difference between joint tenancy and tenancy in common?
Ans: In Joint tenancy, co-owners have equal property shares, generally with a clause of rights of survivorship. If any owner passes away, their shares are added to the remaining owners.
While in Tenancy in Common, each owner can have a specific and dedicated share of property in equal/unequal shares. And if one of the owners passes away, their share is automatically transferred to the surviving family members.
2. How does joint property ownership affect my tax situation?
Ans: With Joint property ownership, taxes are levied individually, not combined. Each owner is responsible for showing their property income and capital gains while buying or selling it.
3. Can joint property ownership improve my chances of getting a loan?
Ans: Yes, with Joint Ownership, a Bank or any other financial institution will collectively check the loan eligibility for all owners. So, multiple owners will have better net monthly income, a better current economic situation, and a better chance of getting a loan.
4. What happens if one joint owner wants to sell the property but the other does not?
Ans: Selling a joint property requires the owner’s share to be declared in the deed. If each owner share is specified, then co-owners have the right to sell their part of the property without consent. If the shares are not mentioned, then co-owner permission is required by law.
5. How is the property divided if one joint owner passes away?
Ans: Depending on the Joint ownership type, specific rules apply to acquire the owner’s rights. Notable mentions in the deed can give particular rights to individuals as well.
The ‘Right of Survivorship’ clause gives the surviving owner rights on the joint property if one co-owner dies.
6. What are the legal requirements for setting up joint property ownership?
Ans: Any two or more individuals can come together to buy a joint property ownership in India. There are rules for residential and commercial property in each state that all owners have to adhere to.
7. Can joint property ownership impact my credit score?
Ans: With a Joint home facility offering a flexible current structure in India, any one or all owners can pay their share separately or collectively. However, in case of loan default, the credit history of all the owners individual will be affected.
