Joint Property Ownership 2024 (Latest Update)

Joint property ownership helps two or more individuals to jointly invest in buying the same property. And this comes with various other benefits like seeking higher loan amounts, tax benefits, and many more. Check out this article to know every other benefit, tax implication, and exception on such property.

What is Joint Property Ownership?

Joint Property Ownership is when two or more people unite for the ownership of the same property. 

And kind of property owned by two or more parties is defined as joint-owned property.

Whereas, these parties can be business partners or other types of people with the similar intention of owning the same property.

Joint Property Ownership Types 

Joint property ownership is divided into four types as such

• Joint Tenancy

Joint Tenancy is a type where the property title deed is defined as joint property owners will have an equal share of the property.

Joint tenancy works on the principle of survivorship. It specifies if the co-owner dies then his/her rights will be transferred to other owners of the same property.

• Tenancy in entirety

This is the variant of joint tenancy. Tenancy in entirety is done between the married couple. I.e. spouses are the co-owners of the property.

Tenancy in entirety consists of survivorship models. 

This joint ownership can only be changed over the decision of spouses or filed for divorce. 

This property is to sell or transfer ownership to a third party, approval from the spouses is needed.

• Coparcenary

Coparcenary applies only to the Hindu Undivided family structure. 

This type of joint ownership makes even unborn children to get shared property equally.

There is no survivorship concept in this kind of joint ownership. 

So, over the death of the owner, property share passes to the heir instead of coparceners.

• Tenancy in common

In this type of joint ownership, two or more people own the property jointly. But it doesn’t has three unity which are possession, interest, or time.

The survivorship concept is also not applicable in this contract.

So the transfer of the property is done based on the will mentioned in the agreement by the owner.

Joint Property Rules

The below-mentioned are the significant rules to consider under joint property ownership.

• Two or more people are the owners of the property.
• The joint ownership can be between the husband, wife, parents, business partners, etc.
• Joint owners will have equal rights over the possession and use of the property unless mentioned in the agreement.
• The problem regarding joint property ownership will arise during disputes among the owners. However, property lawyers will help to resolve the disputes.
• If the joint property is bought through a bank loan then the documents should be arranged before itself. Because it will help to easily provide the details of the co-owner.
• Later on, a gift deed or sale of the selective share portion is the only option available to include a co-owner of the property.

Joint Property Ownership Disputes in India

Joint Property Ownership Disputes is the separation of the property that is jointly owned by two or more people. This is done to provide ownership of the property under his/her share.

• Coparcenary Property

These are ancestral properties that are subject to separation or partition

• Self-acquired Property

These are self-owned properties that are not subject to partition as it is acquired by the owner.

Before the changes in the Hindu succession act 2005, it was specified that females are not considered as coparceners except mothers or grandmothers.

But after the changes in the Hindu succession act, of 2005, it mentioned that females will become the coparcener from birth. And she will have similar rights & liabilities as son.

Methods of Dispute in Joint Property Ownership

The following are the ways through which partition of the property can be done.

• Partition by Mutual Agreement

Partition deed or Family settlement are the two ways through which partition can be done under mutual agreement.

Partition deed

This helps to separate the property between the property co-owners. 

A partition deed is a way for getting his/her property share and absolute title over it.

Family Settlement

In this way family solves the property disputes through negotiation. And the court is also not involved here.

• Partition through court

A legal notice is served to all of the co-owners specifying the interest, share, and the action planned to solve the dispute. This is done before seeking for partition suit.

If this doesn’t work then get it solved through court by filing a civil suit.

• Partition through Will Probate

Probate is the will copy certified under the court seal. Section 222 of the Indian Succession Act 1922 states that probate can only be provided to the executor.

Once the petition is filed, the court will provide public notice in any of the newspapers to seek any objection. If no objection is been found, the court itself will grant probate.

• Jurisdiction of suit

Suit regarding the partition of immovable property should be provided in the court within the jurisdiction where the property is located.

You can check out impact on a joint property after divorce to know the partition  and stamp duty process in this scenario.

Joint Registration of Property Benefits

The following are the advantages of joint property ownership.

• Income Tax Benefits

As income will be split between the property owner over the sale and rent of the property so tax paying scenarios will be very less.

• Representation

In joint ownership, operations like agreements, bank accounts, regulatory matters, society, etc can be managed by any of the co-owners.

• Flexibility over Payment 

Joint owners seeking home loans get a higher loan facility and the repayment process is also hassle-free.

Co-owners can easily strategies about normalizing the EMI payments.

Disadvantages of Joint Registration of Property 

The following are the disadvantages of joint property ownership.

• Dispute

Rent gaining ability, use, title, and value of the property will get affected by the separation of the property.

• Succession

If the property faces any kind of dispute over the completion of joint property ownership then it might face legal issues.

And it may cause various trouble to continue it renting or usability of the property.

So staying careful in processes from home loan payments to legal documents is a must.

What happens in joint ownership of property after death in India?

Over the death of the co-owner of the property, their property shares will by itself pass on to surviving joint owners. 

However, if the final owner of the joint property dies then share rights will pass on to his/her legal heirs who will hold the property.

Laws about Transfer of Joint Property Ownership

Section 44 of the Transfer of Property Act 1882 specifies laws regarding the transfer of joint property ownership.

As per the act, during the sale of joint property, approval from every co-owner is a must. Then only they can proceed with future processes.

Whereas, joint owners can sell their portion of the overall property only if the same is mentioned in the agreement. The agreement should cover the rights of individuals to sell their portion of the property.

Rights of Co-owner in Joint Property Ownership

Co-owner of the joint property ownership will have these three essential rights.

• Possession right of the property
• Use of the property
• Disposing of self-property share, if mentioned clearly in the deed.

Income Tax Implication on Joint Property Ownership

In India, people mostly buy as joint property ownership. 

In most of the scenarios, the property buyer includes children or spouse’s name as co-owner or joint holder. This is practiced for gaining effortless succession, easy property transfer to children, etc.

In some scenarios, co-owners are included in the property to seek higher bank loan amounts to buy the property. This is done if the person’s income is less to seek a higher loan amount.

The spouse will be considered as legal co-owner of the property as the person’s name is mentioned in the registration deed. This is as per general laws.

There is a myth around people that income generated from co-owned properties have will be taxed equally to every co-owners. But this is not the truth.

The joint ownership of the house property from an income tax perspective is varied from general laws. 

The actual co-owner of the house property as per general laws will not be considered a property co-owner as per laws of income tax.

Section 27 specifies that the house property transferer will be considered the owner of the property. And he kept his spouse as a consideration of ownership or co-owner.

a). If the husband financed the whole amount for buying the house property and added the wife’s name as co-owner.

Then as per income tax law, the husband is the owner of the house property and his wife or spouse is not considered as owner.

And even the spouse is not considered a co-owner of the property. So income raised from the property will be taxed under the hands of the husband only.

b). If both husband and wife are financed for the buying of the house property and both are specified as owners of the property in the registered deed then both are the co-owners of the property.

Under the assumption of both contributed money equally to buy the house, they are considered 50-50% co-owner of the property as per income tax law.

So in this scenario, income generated from the property will be allocated equally to both. And both husband and wife will be taxed separately.

Tax Rules of Rental Income from Joint Property Ownership

House property is defined into two that is self-occupied or let-out property

Self-occupied House Property

Before 2019, only 1 house was allowed to with self-occupied status. 

If a person holds more than one house as self-occupied then except for one, the rest of the house property will be considered as let-out property. So on such let-out property, notional rental income is been charged to tax.

Later Budget 2019 stated that from 2019-20 now individuals can self-occupy up to two houses without any of the implication of tax on it.

On self-occupied properties, income from such properties is considered as ‘Nil’

Let-out House Property

If jointly owned house property is let-out to gain rent then such rental income will be charged to tax.

If any of the joint owners is not contributing to buying the property then rental income will not be charged to tax under that individual. 

So only the owner who financed buying the house property will be charged tax under their rental income.

Tax Rules of profit on sale from Joint Property Ownership

Income tax law states that the profit gained from the sale of the house property is defined as a capital gain.

If the house property is been owned for less than 24 months then capital gain from the sale or the transfer of that property will be short-term capital gain. This is specified in income tax law.

If the house property is been owned for 24 months or more then capital gain from the sale or the transfer of that property will be long-term capital gain, stated in income tax law.

The capital gains are charged tax under the hands of the owners of the house property. So in joint-owned property, the ownership ratio should be determined before itself to help in charging the tax as such.

Whereas the ownership ratio is determined by considering the invested amount for buying the property by each co-owner.

The co-owner who has not invested any amount for purchasing the property then he/she is not entitled to co-owner status under income tax law.

However, in the aspect of inherited property or gifted property then the ownership ratio is determined by considering the legal documents.

The full value of consideration specifies that the sale of the property is to do based on criteria mentioned in the sale deed. 

If the sale deed specifies that the sale or transfer of individual property portion is based on the individual decision then it needs to be followed. 

So after finalizing the full value consideration, the capital gains for each co-owner will be determined based on invested capital by each co-owner during purchasing the property.

Capital Gain Exceptions for Joint Property Ownership

Long-term capital gain over the transfer of the property can be saved if that amount is invested in an advised manner.

Each jointly owned property co-owner can save the tax liability over the capital gains of their respective share by investing in the assets. 

And such assets can be owned in their name rather than going jointly. 

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