Why you should buy property in your wife’s name

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Men rule the roost in most families when it comes to money matters. Be it buying insurance, mutual funds, stocks, land or property, all are done mostly in their names. However, there are perks of buying real estate in your wife’s or mother’s names or at least having a co-ownership. Not only do women get loans at relatively cheaper rates, they also help in reducing tax liability. Besides, there are women-specific discounts by the government which encourages women to come forward and buy properties.

“The joint ownership of your house with your spouse means shared responsibilities. It also saves money on stamp duty in some states, concessional interest rates to the women by some banks, increased amount of home loan by the bank, and substantial reduction in income tax of the couple,” says Sujit Bangar, founder, Taxbuddy.com.

Understand tax benefits

There are various tax benefits on taking a home loan such as deduction on home loan interest payment (Rs 2 lakh monetary limit), deduction on home loan principal payment (under section 80-C up to Rs 1.5 lakh), extra deduction on interest under section 80-EEA, stamp duty and registration charges in the year it is paid (part of 80-C limit) and pre-construction interest.

If your wife is a co-applicant in the home loan and a co-owner of the home, you two can separately claim these tax deductions since the monetary limits may get easily exhausted at an individual level.

Tax math

“When a home is bought on loan, you have to repay the loan in EMIs and such annual EMIs may aggregate to more than Rs 2 lakh, but you can claim interest deduction only up to Rs 2 lakh. The remainder of EMIs stays unclaimed for tax benefits. Similarly, as a family, you might have chosen investment instruments so that you do not repeat them among you and your spouse. So, if you have already exhausted your limits of 80C deductions (Rs 1.5 lakh), you cannot claim deduction on account of repayments of home loan and hence such deduction too remains unclaimed,” says Bangar.

“In order to claim tax deductions to their maximum limits, you need to have a co-owner in your spouse. For the purposes of tax deductions, both the co-owners shall be treated as they are independently claiming such deductions,” he explains further.