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Sir,
i am in the process of buying a house in joint ownership with my wife. she is housewife. Financial assets she owns are shares. i am availing home loan with my wife as co-borrower. i need to give loan to my wife to help her finance 50% of the margin money. She will be repaying the loan back to me in 11 years in equal annual instalments.
should i give her interest free loan or charge some nominal interest?
Manoj

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1 Answers

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1 ashal jauhari December 10, 2011 at 10:36 pm

Dear Manoj, My take, please don’t indulge in this thing. It’s advisable if your wife can avail loan from the other members of the family who are in lower tax slab than you.

By the way, may I know the reason of splitting the ownership to 50% each? In my view, purchase the property in joint ownership but all funding should be come from you & if you are giving this property on rent, you may claim full interest benefit (no interest limit like 1.5L Rs. for self occupied one) adjusted for rental income.

Please read some of my other replies on the similar matter to understand the rental income & full tax benefit on home loan.

If you still want to loan your wife, you do have an option – mortgage her shares to your demat account against the loan given to her. In this case, you have the option to do not charge any interest on the said loan. A little paper work ‘ll be required in this case.

Thanks

Ashal

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