The benefits of buying a house in your wife's name

What’s the most important advantage of shopping for property in your wife’s name? Pleasing her, being seen as a trendsetter during a patriarchal society? Yes, there's all that, but the icing on the cake is that you simply might shave off 1-2% of the property value. Several state governments offer women buyers a reduction on stamp tax as a neighborhood of social initiatives (see graphic). Stamp tax is that the tax paid to the government once you buy a property and obtain it transferred in your name. In Delhi, as an example, a lady must pay a stamp tax of 4% compared with 6% for men.

This advantage of lower stamp tax is often availed of even when the property is presented to the spouse. Here’s how this benefit is extended to women.

Empowerment and Autonomy of women

According to Naushad Panjwani, executive of Knight Frank India, the aim of this creativity is to empower women. With more assets in their name, the economic status of girls in India can improve, which successively can make them less susceptible to exploitation. “In many states, there's an inequality within the sex ratio. This is often the ratio of male to female population, with the national average being 914:1000. So this discount was begun to incentivise women property owners,” explains Panjwani. This is often not a one-time deal and applies to all or any subsequent property purchases.

However, far away from being an economic leveller, this incentive is being exploited for trading purposes. “Nearly 75% of all transactions involving women buyers are for trading. The male members purchase a property and get it registered within the woman’s name to profit from the two lower transaction cost. Then they resell the property for a profit within a brief span of your time,” says Panjwani. It’s an honest strategy because even a little percentage saved during a speculative transaction makes for an honest deal

Joint Property Rules in India

If it’s impossible to shop for a property in your wife’s name, consider joint registration. Some states, including Delhi, offer a tenth discount on stamp tax in such cases. Consistent with Mayur Shah, the director, tax & regulatory services, Ernst and Young, there are some legal and tax benefits in buying a second property together with your wife. “If the wife may be a co-owner, she will claim a deduction of up to Rs one lakh fifty thousand (1.5 Lack) for the interest paid on a home equity credit just in case of self-occupied property,” says Shah

 

If the property is let loose, the whole amounts of interest are often claimed by both husband and wife. “In case the husband incurs business debts or losses, any property registered within the wife’s name can't be attached to hide such losses. Also, after the demise of 1 spouse, the opposite automatically becomes the only owner of the property,” he adds.

Taxation system in India

As for wealth tax, the asset is treated as net wealth within the hands of the spouse who owns the property. To urge the utmost enjoy this incentive, remember that simply registering the property within the name of the wife won’t be enough. The provisions of the domestic law in India, consistent with Shah, state that the income earned directly or indirectly by the wife from assets transferred to her are going to be clubbed with the income of the husband.

This means that if you purchase a house in your wife’s name, but she doesn't contribute monetarily to the acquisition , the income from this property are going to be treated as your income & taxed at the appropriate rate. A method of circumventing this is often to offer a ‘loan’ to your wife. So, if you lend her Rs Fifty lakh, she will later transfer jewelry worth this amount in your name.

However, before you opt to shop for subsequent property in your wife’s name, remember that home loans also can be a deciding factor. Banks typically insist that the property be within the name of the one that is applying for the loan. This means if the husband is that the sole earning person in a family, it's going to be difficult to desire the property registered within the name of the wife,” explains Panjwani.