Spend, Save and Invest Smartly
You want to buy a dream house and finally real estate prices have crashed. But there is a small problem. You have to pay stamp duty on the value of the house you purchase. This costs money…Lots of money….Have you considered buying property in wife's name. Finally…A sigh of relief…You find your dream house in a cozy location and decide to buy it. The question now “Howcan you save on the stamp duty?” You need to first know what is stamp duty. When the house is being transferred to you from the seller (The sale deed is registered in your name with the State Government), you have to pay a stamp duty and registration fee on the value of the property. The stamp duty is different for different States in India. Here’s the good news. You have to buy the house in the name of your wife or jointly with your wife to save on stamp duty. If you buy a property/house in Delhi, you have to pay a stamp duty of 6%.If you buy the property/house in the name of your wife you pay a stamp duty of just 4%. This stamp duty is paid on the value of the property and the 1-2% saving is a sizeable amount. Several North Indian States offer a 1-2% concession if the property/house is registered in the name of a female member (say your wife or mother).This is a novel method to empower women.
You can save on your stamp duty if you buy a house jointly with your wife (Your wife is the co owner). If you buy a house in Delhi jointly (yourself + wife), you have to pay a stamp duty of 5% as against 6%, if you buy the house in your name.
You and your wife, jointly avail a home loan to buy a house or a property. The home loan is in your name, with your wife as a co-applicant to the loan. You and your working wife can both get tax benefits on this home loan.
On the EMI (Principal)
• You get a tax deduction on the principal component of the home loan (EMI Principal), up to INR 1.5 Lakh under Section 80 C of the income tax act.
• Your wife if she is working, can also avail a deduction of INR 1.5 Lakhs, on the EMI Principal of the home loan under Section 80 C of the income tax act, if she is a co-applicant of the home loan.
• If you and your wife are both working and avail a joint home loan, both of you can get tax benefits. On the EMI (Interest)
• You also get a tax deduction on the interest component of the home loan you avail, up to INR 2 Lakhs under Section 24 B of the income tax act. Your house must be self occupied.
• Your working wife can also avail this tax deduction if she is a co-applicant to the home loan.
• If you suffer a loss in business, your creditors (Say the bank which has lent you money), would try to seize your house/property to collect their dues.
• If your house/property is registered in your wife’s name, creditors cannot seize your property to settle the loan.
You will find the sex ratio (Number of males: Number of females) very low especially in the Northern States of India. The average male female ratio in the country is around 914: 1000. (This is 914 females for every 1000 males). The registration of houses and property in the names of female members of the family, is expected to help in empowering women of the Nation. The benefits of a reduced stamp duty if the house/property is registered in the name of a female member of the family, helps in women empowerment and prevents their exploitation.
Unfortunately registering a house/property in the name of the wife or a female member is mainly used for speculative purposes.
Nearly 75% of all property transactions in the country, where the property is in the name of the wife/female member of the family are for trading and speculative purposes.
The male members of the family, buy the property, in the names of a female member of the family and avail a 1-2% discount on the stamp duty. This property is soon resold for a profit and a 1-2% return on property value is guaranteed. No matter what the shortcomings, registering property in wife's name is a good idea. You save on taxes and this is a step in the right direction to empower women of the nation.