In terms of taxes, the idea of considered ownership of real estate is essential. It is applicable when someone transfers assets, for any reason, to their spouse or a minor kid. The fact that this person is the presumed owner subsequently affects their tax obligations. Comprehending this notion is vital for proficient tax planning. So, let’s quickly review what this article means by “deemed owner.”

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Legal concepts in the broad field of Indian property law sometimes vary from ownership to tax obligations. Tax ramifications for individuals and families can be greatly impacted by knowing who is deemed the owner. This blog provides you with a brief explanation of what is meant by “deemed owner of house property” in India and how it is different from “co-owner.”

Who is the deemed owner of residential property?

Legally speaking, a person who is regarded as the legal owner of a dwelling property in India even when they do not own the real title is known as a presumed owner. For taxation reasons, he is considered such under certain conditions specified in the Income Tax Act of 1961. This designation has an impact on the property’s assessments, deductions, and tax responsibilities.

Situations in which someone can be judged to be the owner of real estate

Some of the situations in which an individual may be judged to be the owner of residential property under Section 27 of the Income Tax Act are as follows:

[Section 27(i)] Transfer to a minor child

If a residential property is given to a minor child without sufficient consideration, the transferor is considered the property owner. Transfers of property to a married daughter who is underage are an exception.

[Section 27(ii)] An impartible estate holder

Property that cannot be lawfully divided among heirs is known as an impartible estate. As a result, all of the properties included in an impartible estate are regarded as belonging to the holder alone.

[Section 27(iii)] A cooperative society member, etc.

An individual shall be deemed the owner of the assigned section of a building if a cooperative society, business, or association allots or leases a piece of the building to them under a House Building Scheme. even in cases where the society, business, or association holds the legitimate ownership.

[Section 27(iiia)] A person in possession of a property

A person is considered the owner of a building or portion if they are in possession of it or keep it under section 53A of the Transfer of Property Act. This covers situations in which the buyer, despite in the absence of a completed sale deed or property registration in their name, obtains the property, pays or guarantees payment, and holds specific documents such as a power of attorney, an agreement to sell, or a will.

[Section 27(iiib)] A person who has owned property for a minimum of 12 years

According to section 269UA(f), the owner of a building or portion of it is the person who obtains those rights through a lease of 12 years or longer. This does not include leasing rights that are obtained on a monthly or temporary basis—less than or equal to a year.

Distinction between co-owners & considered owners of residential property

A presumed owner may not actually possess the title. But for tax or legal purposes, they are nevertheless regarded as owners. A co-owner, on the other hand, shares the actual ownership obligations and rights. Along with other individuals who have a legal and material claim to the property, co-owners hold title to it.

The notion of presumed ownership with regard to residential properties is essential to legal and tax systems. It contributes to the definition of ownership beyond the boundaries of stated titles. Understanding the ramifications of transactions, whether they include transfers to family members or other relevant transactions, can aid people in making wise choices.

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