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Ramalingam

Ramalingam Kalirajan  |8104 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Nitin Question by Nitin on Jun 23, 2024Hindi
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My father is having Rs.1.00 cr from sale of his 1 BHK (purchased more than 3 yrs before) and want to purchase new 2 BHK house for Rs.1.60 cr. For the short fall amount, I intend to take loan of Rs.0.40 cr and having saving of Rs.0.20 cr. We want my father's name on new 2 BHK as 1st joint owner and my name as 2nd joint owner. This way, my father can save capital gains tax and I will be able to take tax benefits of housing loan interest and principal. Kindly advice on my plan.

Ans: Your plan to buy a new 2 BHK house with your father is a smart move. You are leveraging both your and your father’s resources effectively. Let’s dive into the details.

Current Financial Snapshot
Your Father's Finances
Sale Proceeds: Rs.1 crore from selling 1 BHK
New Purchase: Rs.1.60 crore for a 2 BHK
Capital Gains: Aim to save tax on these gains
Your Finances
Savings: Rs.20 lakhs
Loan Requirement: Rs.40 lakhs
Joint Ownership: First owner your father, second owner you
Evaluating Your Plan
Capital Gains Tax Benefits for Your Father
Buying a new residential property within the stipulated time frame helps save on capital gains tax. Your father sold his 1 BHK and plans to buy a 2 BHK. This is a good strategy to reinvest the gains and save on taxes.

Joint Ownership and Tax Benefits for You
By making your father the first joint owner and yourself the second, you can avail tax benefits on the housing loan interest and principal repayment under Sections 24(b) and 80C of the Income Tax Act.

Analyzing the Loan Requirement
You need a loan of Rs.40 lakhs. Ensure that you are eligible for this loan amount based on your income and credit score. This loan will help bridge the gap and make the purchase possible.

Detailed Financial Plan
Investment Strategy for Your Father’s Proceeds
Utilizing Rs.1 Crore: Invest the entire sale proceeds into the new 2 BHK to save on capital gains tax.
Loan of Rs.40 Lakhs: Secure a home loan to cover the shortfall.
Leveraging Your Savings
Use your savings of Rs.20 lakhs towards the purchase. This reduces the loan burden and associated interest costs.

Ensuring Loan Eligibility
Check your loan eligibility based on your income. Ensure your credit score is healthy to get the best interest rates.

Tax Benefits and Savings
Principal Repayment: Deduct up to Rs.1.5 lakhs under Section 80C.
Interest Repayment: Deduct up to Rs.2 lakhs under Section 24(b).
Execution Steps
Finalizing the Purchase
Property Registration: Register the new 2 BHK in both names as planned.
Loan Sanction: Apply and get approval for the Rs.40 lakhs loan.
Managing Finances Post-Purchase
Loan Repayment Plan: Set up a repayment schedule that suits your income flow.
Tax Declarations: Ensure you declare the loan details for availing tax benefits.
Risk Management
Insurance: Consider getting home loan insurance to cover the loan amount in case of any unforeseen events.
Emergency Fund: Maintain an emergency fund to manage any financial hiccups during the repayment period.
Long-Term Considerations
Property Appreciation
The new 2 BHK is likely to appreciate in value over time, adding to your wealth. Ensure you maintain the property well.

Retirement Planning for Your Father
Ensure your father’s financial security. The property should serve both as a tax-saving tool and a secure asset for his future.

Financial Security for Your Family
Joint ownership ensures both you and your father have a stake in the property. This provides security and peace of mind.

Power of Compounding
Invest any surplus funds into mutual funds for long-term growth. The power of compounding will help grow your wealth.

Mutual Fund Investments
Equity Funds: High growth potential but comes with market risk.
Debt Funds: Stability and regular income.
Hybrid Funds: Balanced approach with equity and debt.
Actively Managed Funds
Actively managed funds are handled by professional managers. They aim to outperform the market with strategic investments.

Final Insights
Your plan to buy a new 2 BHK is solid. By leveraging your father’s proceeds and taking a loan, you are making a smart financial decision. Ensure you:

Utilize Capital Gains: Invest proceeds in the new property to save tax.
Leverage Tax Benefits: Maximize deductions on loan repayment.
Plan Finances: Manage loan repayments and maintain an emergency fund.
Invest Wisely: Consider mutual funds for long-term growth.
Your proactive approach and thoughtful planning will lead to a successful financial outcome. Stay disciplined and monitor your progress regularly.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8104 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 04, 2025

Asked by Anonymous - Jan 25, 2025Hindi
Money
Kindly guide on the below situation. My husband and I own 3 flats. Calling them as A, B, C for convenience. We are living in flat A(largest value), co-owned by both, his is first name, and mine is second. Entire contribution by him. Flat B also identical situation, which is empty. Flat C similar value as B, here, am first owner, he is second, but contribution is around 90% by him and remaining 10 by me(I was earlier working). Flat C was given for rental all these years, but rental income was credited to a joint account which both of us have. But he wasn’t ok with my using the amount in this account as he said saving it for son higher studies etc. But annual tax was paid by me, which he reimbursed to me later. Now , he wants to sell both flats B and C, as B has been lying empty for years and C is difficult to manage as in a different city. In their place, want to buy 2 equivalent new flats(capital gain tax etc). But for the 2 new flats, he wants to change ownership as follows. Reason he is mentioning is so that later our son doesn’t have to deal with inheritance tax etc. 1. For flat purchased with sale of flat B amount, he wants to put his name as first owner and second as our son who is 18 years old and is a student. (he is ok with putting my name as 3rd) 2. For flat C where I was first name, he is proposing buying equivalent flat with my name first and our son’s name second. For this, he wants to transfer his share of the sales proceeds(90%) to our son, as gift, and then use that to buy the flat. (he says as son is blood relative it doesn’t incur tax) My concerns / queries are as below. 1. There have been lot of friction between my husband and me from time to time , and cannot say what is the future. Am worried whether he is doing this to somehow remove me out of ownership. But he says , that am anyway second name in flat A which is the biggest value. 2. Am not comfortable with adding my son’s name at this stage, as he is 18 and a student and I don’t want him to get involved into financial matters / owning flat / paying income tax etc till he finishes studies / higher studies etc. 3. Am also worried that this should not cause any dispute or conflict between me and my son in future. 4. Also, my query is , if am joint owner in a flat, then even if he has contributed most of it, do I still have any rights? And in his proposed plan, am I at risk of not having any financial security w.r.t the flats, for myself? 5. If in the flat where my son and I will be joint owners, majority of the funds will come through my husband’s gift amount to son, then even if my name is first, who will be the actual majority owner of the flat? Who will get the rental income and who will pay tax? 6. I would prefer status quo, that is , in the new flats bought in place of B and C also, same ownership as before continues. And it can all be passed to son after our lifetime, or through a will etc.
Ans: This is a thoughtful and complex situation involving financial, legal, and emotional aspects. I'll provide detailed guidance addressing each concern individually and from a holistic perspective.

1. Concerns About Ownership and Friction
You mentioned past friction with your husband and uncertainty about the future.

As a co-owner of Flat A and B (even if contributions are primarily from him), you retain legal rights, including consent on sale or transfer.
Joint ownership protects your stake in these properties. Even if his contribution is larger, legally, your name on the property ensures shared rights unless explicitly defined differently in a sale deed.
Given potential concerns about exclusion from ownership, it's wise to formalize any agreement regarding your rights and contributions.
Suggestion:
If your husband insists on involving your son, ensure that you remain a co-owner with clear legal documentation securing your share and rights in all flats, including future sales or inheritance.

2. Discomfort with Adding Son as Co-Owner
At 18, your son is legally an adult but may not be financially mature enough to manage property ownership responsibilities.

Property ownership can expose him to complications, including potential tax liabilities, legal obligations, or unintended liabilities if issues arise.
Ownership changes can also affect financial aid eligibility for higher education.
Suggestion:
Consider postponing adding your son’s name until he is older and capable of making informed financial decisions. Instead, secure his inheritance through a well-drafted will.

3. Potential Conflict with Son in the Future
Inheritance and joint ownership sometimes create misunderstandings or disputes between parents and children.

Suggestion:
Clearly document ownership shares and rights through a formal family agreement or by registering a legal document defining your respective stakes.

Additionally, consult a legal expert to draft a comprehensive will specifying how properties should be distributed upon your and your husband’s demise.

4. Rights as a Joint Owner Even with Minor Contribution
In a joint property ownership setup, your rights are determined by the registered sale deed, not just the financial contribution.

Your legal status as a co-owner entitles you to decision-making rights and a share in the property's income or sale proceeds.
Your husband cannot unilaterally sell or transfer a jointly owned property without your consent.
Suggestion:
Ensure all documents clearly reflect your co-ownership.

5. Gifting to Son and Tax Implications
Your husband plans to gift his share of proceeds to your son for purchasing a flat.

Gifts between blood relatives (father to son) are tax-exempt under the Income Tax Act.
However, rental income from such a flat would belong to your son as a legal owner and may trigger tax liability in his name.
If you are listed as a co-owner but funds are primarily from your husband's gift, your son would technically have the dominant financial claim.

Suggestion:
Consider keeping ownership proportion aligned with the contribution, or ensure your financial rights are explicitly protected through legal documentation.

6. Preference for Status Quo Ownership Structure
You prefer maintaining the same ownership structure for the new flats as with B and C. This is a practical and simpler solution.

Retaining the current ownership pattern avoids unnecessary tax implications and legal complications.
It ensures continuity and clarity regarding property rights for both you and your husband.
Suggestion:
Discuss this preference openly with your husband, emphasizing the ease of inheritance through a will rather than restructuring ownership prematurely.

Final Recommendations
Legal Documentation: Engage a legal professional to draft a family settlement agreement and update your will to reflect inheritance intentions.

Ownership Clarity: Ensure new properties reflect the same ownership structure as existing ones unless both parties agree otherwise in writing.

Will Preparation: Clearly state property distribution to your son after your lifetime.

Rental Income: Formalize agreements on how rental income will be shared and taxed to avoid disputes.

Family Discussion: Have a transparent conversation with your husband and involve a legal expert to mediate if necessary.

This approach will protect your rights, simplify inheritance, and avoid future disputes.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

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Ans: Dear Anonymous,
You need to make a decision for yourself after looking at all the pros and cons. How are you going to be able to handle your parents once you make the decision to go ahead with the marriage?
Also, on your part, you are right in asking, how long do you need to wait?
Before making a decision, always think far ahead as to how your environment will react and how you are going to handle all of it.

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

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Anu Krishna  |1557 Answers  |Ask -

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Asked by Anonymous - Mar 09, 2025Hindi
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Hi Mam, My parents are not agreeing for the marriage with my boyfriend cause it's an interfaith relation. I tried convincing them but they keep on saying foul words to me, saying that they would kill themselves if I don't leave him. I had seen my family from childhood and I don't want to be in a similar situation as they are, my mother had a relationship with someone else after marriage, my sister is not the biological child of my father, I am aware of all those but I haven't blamed them for that cause I felt if that's what is making them happy let them be, I haven't even confronted them. Now they say all the good stuff that me and your father were very great to each other you should learn those things and all. I am struck in a situation now. I have a job and my boyfriend also has one, could you please suggest.
Ans: Dear Anonymous,
Judging your parents and their choices is not going to anyway help you in your context. So, why even go there?
Instead focus on your situation and how you can make things happen for yourself.
- Are you financially independent and will you be able to manage the discomfort that will emerge once you choose to be on your own?
- Will your boyfriend support your decision and will he stand by you when you go against your family?
- What does his side of the family have to say about all of this?
If you notice the questions above, none of them are set to 'convince' your family. It is almost impossible to convince someone who does not want to be convinced. These questions will give you an idea and enable to handle your situation by stepping up for yourself.

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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