Pre-Requisites That One Must Know While Owning A Property Jointly With Your Spouse

With thousands of married couples investing into real estate deals happening every day, there is a plethora of schemes and offers for married couples put forward by banks and other institutions dealing in real estate. Shashank Shekhar at the age of 33 was told by his bank that if he made his housewife Shalini Shekhar a co-applicant in his loan plea then he could increase his loan eligibility significantly. Without giving it a second thought, he agreed, after all, what could possibly be the downside of such a move. While Shekhar did not give this much thought, it is advised not to make hasty decisions, especially when dealing with loans. It is understandable that we cannot be certain of how a deal unfolds in the future but there are certain ideas that one should be clear about when signing up an important deal like the one mentioned:
 
Firstly it is important to understand that one does not become a co-owner of any property by simply becoming a co-borrower in the loan scheme. It is also imperative to know that a wife should not have any concerns in regard to the ownership of the property. Under the law (Marriage Laws Amendments Bill, 2010) it is stated that the wife becomes a co-owner of any property bought by the husband after the initiation of the marriage.
 
In order to avoid future conflicts and also in aims to provide clarity on the subject, it is suggested that the property papers have a clearly defined share of each co-owner in the said property. For eg., if one of the people in the party of two decides to give more share to the other, it must be mentioned clearly in the property papers for legal and official purposes.
 
Tax Benefits for Property Co-Owners to Avail
 
The reason why most borrowers are recommended to make their spouse a co-applicant in their application of home loan is because without being a co-applicant, the spouse cannot claim any tax benefits, being a co-owner is not enough, one must also be a co-borrower.
 
All incomes and claim deduction must be declared by the co-owners of a joint property clearly in their respective tax returns. This process is not recommended by tax authorities.
 
There is a major reason why non-earning members should not be named as co-borrowers, it is so because in situations where the earning members are unable to repay the loan, then the responsibility falls solely on the non earning member. Usually, in situations like these, the non-earning member is forced to sell the property in order to repay the loan, this goes against the initial purpose of buying a property.
 
In most joint-home loans if the primary borrower defaults on his/her payments, the other co-borrower would also have their credit worthiness impacted. This repayment history is reflected on both co-borrowers equally. Situations like these could affect the chances of availing any loan in the future for the secondary borrower.
 
Benefits
 
There are also various benefits one might gain from owning a joint property.
 
Having a co-applicant can significantly increase the boundaries one might have in the financial spectrum when thinking of buying a property. A co-applicant can help one make their dream home affordable.
 
Co-borrowing can be extremely beneficial for working spouses with home loans, with both borrowers earning they can individually enjoy deductions on Rs. 1.5 lakh per annum on the principal component and on the interest component of Rs. 2 lakh per annum on a home loan.
 
Stamp duties are also two percent less for women in most states while the property is being registered. This reduced stamp duty can be availed in most states if the property is a woman’s name.
 
Distribution of assets can also be problematic if the property is owned by a single person. With dual ownership of the property, even if the demise of one takes place, the surviving member can execute his/her rights over the succession strategy.