Buying property? Here's why your wife's name could mean extra savings

Buying property in your wife's name can help you save on stamp duty, get lower home loan rates, double tax benefits, and even protect assets. Here's how it works

Purchasing a home is one of the biggest investments a family makes. But did you know that buying property in your wife’s name can offer distinct financial and legal advantages? Investment banker Sarthak Ahuja recently shared insights in a detailed LinkedIn post explaining why this strategy can help couples save money, gain tax benefits, and protect assets. Here’s an explainer on why this could be a wise choice for Indian families.

 

Stamp duty savings

 

One of the immediate benefits of registering property in a woman’s name is the reduced stamp duty in many Indian states. Stamp duty is a tax paid during property registration, and states like Maharashtra, Delhi, and Gujarat often charge women a lower rate, typically 1-2 per cent less than men. On an expensive property worth Rs 3 crore, this difference could translate into a saving of up to Rs 6 lakh, right at the outset.

 

Many couples also choose to hold property jointly, splitting the ownership 50:50. This can further reduce the overall stamp duty burden, since the transaction value is effectively divided, and the woman’s share attracts the lower stamp duty.

 

Lower home loan interest rates

 

Banks and housing finance companies in India frequently offer lower interest rates for female borrowers. The discount can range from 0.5 per cent to one per cent, which adds up substantially over a long loan tenure. Additionally, government schemes like Pradhan Mantri Awas Yojana (PMAY) provide interest subsidies specifically for women, making home loans even more affordable.

 

Lower interest means a lighter EMI burden and savings that could amount to several lakhs over 15-20 years.

 

Double tax benefits

 

When the property is jointly owned by husband and wife, both can claim deductions on home loan repayments:

 

·  Section 80C: Principal repayment can be claimed by both spouses up to Rs 1.5 lakh each per year.

 

·  Section 24(b): Both can claim deductions on the interest paid on the home loan, up to Rs 2 lakh each annually.

 

This essentially doubles the tax relief, significantly easing the family’s tax outgo.

 

Legal protection and asset security

 

Owning property in your wife’s name can also provide a layer of legal protection. If the husband faces business liabilities or legal claims, creditors often cannot lay claim to the wife’s share of the property, assuming she has contributed financially and is a co-owner. This makes property ownership a potential shield against personal financial risks.

 

What to keep in mind?

 

It’s important to note the clubbing provisions in Indian tax law. If the wife’s name is on the property, but she hasn’t contributed financially, rental income from the property may be taxed in the husband’s hands. So, financial contribution by the wife is crucial for tax and legal benefits.