A joint owner of the property can be made and as per law, be default, the owner will own half of the property by default, but you also have an option of specifying the particular ratio of ownership for the property. I am providing you with two options as to how you can make another person a co-owner.
Sale Deed: A part of the property can be sold to the other person and he can get himself registered as the co-owner by using the sale deed and by paying the necessary charges. The stamp duty of the property will vary as per its market value but is mostly in the range of 15-20%, and 1% will be the charges for registration.
Gift Deed: By gifting the flat to someone you can share the ownership of the flat. For this you need to execute a gift deed on a stamp paper and register it with the registrar’s office. If its a relative then it will not be taxable. If it’s gifted to a non-relative, then the house valuation will be treated as income and taxed as per the income tax rules for that relevant year. Generally there is 2% stamp duty charged of the value of the property plus 1% registration charge.
What are the benefits for Co-Owning a property ?
This is most beneficial for married people because in case of death of one partner, the person who has survived will become the sole owner of the house automatically. So, the legal procedure becomes easy and transfer of rights is also easy.
Another important advantage is that the couple can take home loan jointly and each person can avail the tax benefits separately for the same. Both the partners will have an option of claiming Rs. 1.5 lakh on the paid interest on their home loan under Section 24 of the Income Tax Act. Under section 80C they can also claim Rs. 1 lakh on the principal amount and claim tax benefit.
Rights and Taxation
The co-owner has entire proprietary right for the entire property as per the Transfer of Property Act. Unless specifically mentioned in the agreement, any transaction will have to be done only after taking consent of all the owners. The decision to reside, rent or sell will lie equally with the co-owner.
The co-owners will have to pay tax on the capital gains that are earned upon selling the house. For the second owner the capital gains will be computed on the basis of the market value and also whether it was gifted or sold.