I am a software engineer working in Pune. I purchased a 3-BHK flat in 2004, in my name and availed fixed rate home loan from State Bank of India, for a term of 15 years. At the time of purchase, I was single. Now, I am going to be married soon. My fiancée is also working in the software industry. I would like to share the loan liability and the tax benefits with her. There are a few queries I have in this regard.

Firstly, what is the procedure to make her a co-owner of the house? Secondly, what are the costs associated with the same? Will the stamp duty and registration charges have to be paid again? Thirdly, are there any legal formalities to be done for this with the builder, and the lending bank? And finally, would it make financial sense, to forgo this loan, and take a 5 years loan after the above procedure is complete?

Please let me know if I have missed out on some important aspect.

(Via Email)

Your wife (currently your fiancée) would need to satisfy all the following conditions in order to become eligible for claiming the tax benefit on account of the home loan:

She should be the co-owner of the property. She should be the co-applicant to the home loan; and she should be contributing to the repayment of the home loan

To satisfy the first condition, you will have to transfer a part of the property in her name, do all the paperwork and pay for the stamp duty etc, and register the flat in her name. This, in my opinion, is going to be a costly affair, considering the amount of tax benefit that you are looking at. A simple agreement may not satisfy the tax authorities (don’t let anybody misguide you on this) as such ploys are generally employed to save the tax bill. This is tax avoidance, which is considered illegal, as against tax planning, which is legal if you can prove it.

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