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Joint Ownership of a Property, A Boon Or A Bane?

Joint Ownership is a property which is purchased by two or more parties, which could be business partners, friends, husband-wife, family etc.
Buying a property can be a dreadful task as it requires a lot of capital investment. For the last decade, people are readily buying homes because of the benefits of joint ownership instead of lone ownership of property.
One can reap the benefits of Joint ownership if they are a working professional or business owner.

According to the law, there is no restriction on who can be an owner, be it parents, husband, wife, children, siblings, business partners etc.

Even if financial liability is handled by a single owner, the benefits of Joint Ownership can be withdrawn by co-owners.

In Joint ownership, upon the death of one of the owners the property is transferred to surviving owners but not to the deceased estate.
Each tenant must have equal shares of property and the same type of estate for the same duration of time.

Advantages

1) The main advantage of co-ownership of a property is the increase in loan eligibility. Because for home loans, banks tend to see monthly income (including EMI’s) to give a certain amount of loan.
For example, if a person earns around 50,000 per month, the bank could only give a loan which has a monthly EMI of not more than 25,000.
But to get a higher loan, the buyers can apply jointly as co-owners to show higher monthly salaries, so that banks grant higher loan amounts.
From Lender’s perspective, he can consider low chances of bad debts if there is more than one applicant.

2) Co-owners can get the income tax deduction for the principal amount as well as interest.
According to Section 80C of the Income Tax Act, if there are co-owners they can easily benefit approximately 1.5 lakh in principal amount per year and 2 lakh on Interest.
It also allows co-owners to profit from multiple tax benefits from a single loan.

3) It is an easy process for co-owners to transfer in sudden circumstances of death/accident of one of the owners, it just requires a new registration of property with all the new owners in the solicitor’s presence.

4) Joint ownership can make the repayment process easier. It is up to the co-owners to decide who reimburses the payment.

5) Equal profit sharing of the co-property owners i.e when a third party pays rent, it is equally divided among the owners.

DIsadvantages-

In co-ownership, there is more than one person so the process takes longer and repeats due to incomplete documentation. So, it is wise on one’s part to submit all the documents and avoid forgery as it results in rejection of the application.

As there is an option to decide whether one of the owners or both would repay the loan, but in case of default payment credit history of all the stakeholders of the property will be impaired.

Due to the sudden death of the co-owner, the loan amount should be paid by the other owner. It becomes quite a problem when the owner is a non-earning member. It is better to choose an earning partner in the joint property ownership
.
In Joint- ownership there is a lack of freedom, as it needs permission from the other parties in property ownership to validate the structural alterations of the property.

Hence, before owning a property under joint ownership, one should be cautious and steer clear of the disadvantages, so that one can take the leverage of benefits under co-ownership.

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