How Do You Divide Property Among Co-Owners?
Divide Property Among Co-Owners : When people co-own a property, there may come a time when each party wishes to assert full ownership of their portion. However, dividing property among co-owners has numerous legal implications. navimumbaihouses explains how having a partition deed in place aids in the smooth division of a property.
EX- Aman Gupta and Randhir Gupta are brothers who recently inherited land from their father. They now want to divide the property evenly and build their own homes on it. Many people, like Aman and Randhir, want to leave a jointly owned property but are unaware of the various legalities and taxation rules that apply. As a result, the following is a detailed explanation of how to divide property amicably among co-owners.
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Considerations when dividing a co-owned property
In the event of mutual agreement
A partition deed must be signed between the co-owners regardless of whether the property is being divided among family members, business associates, friends, or others (co-owners can be more than two).
The property is divided in accordance with an investment, will, or mutual agreement. Following the division, each person becomes the sole owner of his or her share and must surrender and transfer certain property rights (previously held jointly). In addition, each divided property receives a new property title that must be legally registered. “When dividing the property, a Memorandum of Understanding (MoU) must be signed between the co-owners.” After signing the MoU, the property must be mutated (also known as Dakhil Kharij) in the owner’s name in the revenue department.”
It is not always necessary for each owner to have an equal share. It can vary depending on the amount of investment and other factors.”However, proof of investment must be included in the purchase document.”
Another important question that many people have is whether they can sell their shares further. A co-owner can sell or give away his or her share of the property. However, the share must be clearly stated in the property title and partition deed.
It is important to understand that co-ownership refers to an undivided share. Though all owners own a portion of the property, their shares are not physically defined, and any demarcation is generally based on a mutual agreement between the parties.
Divide Property Among Co-Owners : In the event of a disagreement
“If one party wants to leave the joint ownership while the others do not, the only option is to file a partition suit and a declaration suit,” The property is divided equally if the buying agreement does not specifically mention the shares or investments of each owner.
In such cases, the original ownership papers, transfer papers. And all other related documents must be present to facilitate the process. A commissioner is then appointed to survey the property and report on how it should be divided.
To avoid disputes, a partition deed should be executed on stamp paper and written in a clear and unambiguous manner. Each person’s share should be clearly and explicitly specified. The deed should specifically state the effective date of the partition. The names of the parties and their respective shares should also be specified categorically.
Divide Property Among Co-Owners : Implications for taxes
If the parties have a joint home loan on the co-owned property, they can claim the property’s tax benefits separately. Under Section 80C of the Income Tax Act, they can claim deductions of up to Rs 1.50 lakh and tax benefits of up to Rs 1 lakh on the principal amount repaid (ITA).
If they sell their stock again, they will have to pay tax on the capital gains.
Furthermore, before applying for a deed of partition. One should be aware of various acts such as the Hindu Succession Act, Indian Succession Act 1925. And Muslim Personal Law (Shariat) Application Act, 1937.
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