Buying property together: Benefits, rules and risks of joint ownership

Buying a property is one of the biggest financial decisions most people make in their lives. It requires careful planning and a significant financial commitment. To make it more affordable, many buyers choose to purchase property jointly with a spouse, family member, or business partner.In some cases, joint ownership may also help buyers benefit from lower stamp duty or home loan rebates, helping reduce the overall cost. However, while it can offer financial advantages, joint ownership also comes with certain limitations and responsibilities that should be considered before making a decision.Types of joint ownershipProperty can be jointly owned in different ways, each with distinct legal implications.

Under ‘tenancy in common’, co-owners hold separate shares that can be transferred independently, and an owner's share passes to their heirs upon death.

In India, Joint Hindu Family Property is collectively owned by members of a ‘Hindu Undivided Family’ (HUF) and managed by the Karta on behalf of the family.Additionally, Coparcenary, a concept under Hindu law, grants an interest in ancestral property by birth. Following a 2005 amendment, daughters enjoy the same coparcenary rights as sons, including the right to seek partition of the property.

Shared ownership, shared costs: How joint ownership can benefit youPurchasing property requires a significant financial investment, which can be burdensome for an individual buyer. Joint ownership allows mutual sharing of the financial burden. It also improves the purchasing power of buyers, who can now target bigger or more premium properties. At the same time, it allows owners to potentially earn income by leasing the property.Owning a property involves constant management, including its repairs and maintenance. Joint ownership ensures the responsibility is distributed.Some states even offer a stamp duty rebate to women co-owners or couples who register a property jointly.In the case of married couples or family members, if there is a provision, the property often automatically transfers to the surviving owner(s) when one co-owner dies.

This streamlines the process of inheritance.However, joint ownership has its own disadvantages.Risks of joint property ownershipInvolvement of multiple individuals during the process of property ownership comes up with a lot of paperwork, which can extend the processing time. Any discrepancy further delays and complicates the process.Because of co-ownership, an individual cannot make decisions related to the property independently and requires the consent of co-owner(s).

This may lead to disagreements that may evolve into disputes. In the case of family, this negatively affects personal relationships.In property ownership involving a joint home loan, all co-borrowers are responsible for repayment. Hence, if any individual delays or is unable to contribute to EMIs. The credit score of all applicants can be negatively affected.Tax benefitsUnder Section 26 of the Income Tax Act 1961, when a house property is owned by two or more individuals whose shares are definite and ascertainable, they are not taxed collectively.

Instead, the income from the property is calculated individually for each co-owner based on their respective share.According to Section 24(b), for a self-occupied property, each co-owner can individually claim a deduction of up to Rs 2 Lakhs per year specifically on the interest paid toward a home loan.Additionally, under section 80C, each co-owner can deduct up to Rs 1.5 Lakhs per financial year for the repayment of the ‘principal’ portion of the loan.