How A Co-Owner Can Be Added To A Property?

How A Co-Owner Can Be Added To A Property, Want to add a co-owner in your property? Then, here is a complete procedure of legal steps one has to follow.

When you buy property, the property owners have a choice to add co-owner for their flats, apartments or plot. In case of owner’s death, to avoid any kind of conflicts that might come up, the owner wish to add a name as co-owner. Verbal agreement is never the right way and there is no way to declare an added co-owner name in the property.

Any property owner to add a name has to create a new deed altogether that will be be registered at the sub-registrar’s office, to attain a legal validity under the Transfer of Property Act.

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• How to add a co-owner to a property?

 Types of deeds for transferring partial rights in a property

There are two ways to add a co-owner to the property either by a sale deed or a gift deed. Let’s understand both the words in detail.

Sale deed: Is a new sale deed that clearly mentioning the portion of the property that is being transferred in the name of the co-owner. This deed must be registered at the sub-registrar’s office of the area concerned. Also, for a new property sale deed it is required to pay Stamp duty and registration charges at the time of registration of the new sale deed.

Gift deed: In this process the owner gifts a portion of the asset to the intended beneficiary. A deed of gift must be executed and duly registered at the sub-registrar’s office of the area concerned. Stamp duty and registration charges would be applicable at the time of registration of the gift deed as well.

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 Clarity of title

There should be clarity between you and your co-owner for the title shared of the either of the residential property or commercial property. If the share of the joint owners is equally done, then in case of any mishap of death of one would eventually give the ownership to the other. In case of an unequal share, the co-ownership would be tenancy in common.

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Stamp Duty For Sale Deed/ Gift Deed

Type of deed-----------------------------------------Stamp duty

Sale deed-----------------------4%-8% of property value, depending on the state.

Gift deed------------------------------------------2% of the property value.

Registration Charges For Sale Deed/ Gift Deed

Type of deed---------------------------------------------Registration charge

Sale deed----------------------------------------------1% of the property value.

Gift deed-----------------------------------------------1% of the property value.

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What are the Implications of adding a co-owner on home loans?

If there is a home loan on the property for sale or the owner wishes to partially gift then he will have to inform the bank about the whole arrangement. In that case, to add a co-owner, there will be a whole new home loan agreement by the bank which must be registered after paying the due stamp duty and registration charges.

The bank would also check for the creditworthiness of the new party as they will be liable to pay all the charges, according to the bank’s policies.

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What can be the Income tax implications of adding a co-owner to a property?

Any individual who buy property in joint ownership, their spouses can individually claim tax rebates under Section 24 and Section 80C of the income tax law.

In future if an individual wish to sale the property, the co-owners will have to pay capital gains tax, proportionate to their share in the property.

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FAQs

How can I add a co-owner in my property?

A gift deed and a sale deed both can help you in adding a co-owner.

How to make a gift deed for property?

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As per the Transfer of Property Act, the transfer of a house property under a gift, has to be effected by a registered instrument/document, signed by or on behalf of the person gifting the property and should also be attested by at least two witnesses.

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