Can Your Wife Help You Bring Down Property Investment Cost?
In its attempt to increase property ownership among women, the government offers many incentives. To begin with, women have to pay less in stamp duty is a property is registered in their name. In national capital Delhi, for instance, while the stamp duty charge is seven per cent for men, it is only five per cent for women. This means if a woman is buying a property worth a crore, she will be paying only Rs 5 lakh as stamp duty while a man will have to pay Rs 7 lakh. While several states already charge less as stamp duty from women, more and more are joining this bandwagon. Recently, Jharkhand announced that women homebuyers will have to pay only Re 1 as stamp duty charge in the state.
Banks, on the other hand, offer women loans at cheaper rates. For instance, a woman can take a home loan of up to Rs 30 lakh from State Bank of India at an interest rate of 8.50 per cent while the charge for other borrowers is 8.55 per cent. This is applicable even if the woman is only a co-applicant.
Similarly, there are many tax rebates women enjoy as property holders. In case of a self-occupied property, an additional deduction of interest up to Rs 1.5 lakh every financial year is offered in case a property is registered in your name.
The obvious benefits often lead to buyers using their spouses' name only to gain monetary benefits, failing the entire purpose of the largesse extended by authorities. However, an oversight in this regard may lead you in trouble, and not just monetarily.
Here are some points for you to consider before making an investment in your wife's name:
- Unless a woman has her own source of income, buying a property in her name might not be a great idea. Registering a property in the name of a homemaker wife, in fact, amounts to a benami transaction — using a proxy to park your own funds. As the government is ready to crack the whip on such transactions, there might be more chances of losing than gaining. Joint ownership of property will be a better option in such a scenario.
- In case you wife is working and the two of you have combined your incomes to buy a property, the rental income earned from such a property will be taxed separately. However, in case your wife is a homemaker and has not made any monetary contribution in the purchase while the property is registered in her name, the rental income will be combined as the husband's income and taxed accordingly. By lending her money in exchange for her jewellery could help you avoid your income getting clubbed.
- In case of a future dispute over the property, a husband's accountability will be equal even if the property is registered in the wife's name.
- While banks do offer cheaper home loans to women borrowers, they might refuse to offer a home loan to person without a source of income of her own
Also Read: Advantages Woman Home Buyers Have In India