What Are The Tax Deductions for Joint Property Owners?

. 6 min read
What Are The Tax Deductions for Joint Property Owners?

It is common to own a property in joint ownership, be it a residential property or a commercial property. The Income Tax Act of Section 26 covers the guidelines for owning a property and the related taxation processes. However, many tax-related issues arise when two individuals jointly own a property. The property's income share may be in the form of rentals or capital gains at the time of sale.

If the proprietor’s share is treated as a separate portion, it would be considered an individual and not as a Body of Individual (BOI) or Association of Persons (AOP) or organisation.

How Is the Share Between the Joint Property Owners Determined?

The ITR for self-employed and joint property owners is different. However, let’s check out how to determine the amount of share between the joint property owners:

  • The expenses might be paid in instalments or by taking the credit/ home credit from the bank.
  • It can be identified from the bank articulations of the co-proprietors.
  • If you have not contributed to property purchasing, you will not be considered a co-proprietor for personal expense purposes.
  • The property will be procured by legacy or by will or government action if there is a legal guardian.
  • In case of a will, the proprietor’s portion will be written in the document and will be given accordingly.
  • If the property is acquired mutually, the proportion will be distributed between the proprietors as per the rules and regulations of the government.
  • If the legal heirs will surrender the right on the property or discard it in any case, the proportion of the property can be changed and will come under government hands.

Tax Deduction for Jointly Owned Property

When the jointly owned property is sold, every co-proprietor has to contribute a piece of the amount of capital gain as an asset. The allocation of the amount will be made on the 'cost of acquisition' and not on 'net taxable capital gain'. Under Section 54EC, every proprietor receives a guarantee exception of up to Rs 50 lakhs of capital gain towards the jointly owned property, private or business.

The limit of interest on bonds is mentioned under Section 54EC and is determined by the addition of new co-proprietors and not on the property. Similarly, the exceptions of long-term capital gains are covered under Section 54F and can be increased with the new addition of co-proprietors.

tax deductions written on yellow coloured piece of paper on other documents

Joint Tax Filing for Married Couples

In India, there is no rule where couples can go for the joint filing of their taxes. However, married couples can save a considerable income amount by separately filing their income tax returns. A married couple can record their particular wages, allowances, credits, and exclusions on a similar government form when documenting the charges under Joint tax filing status.

The Joint tax filing is best for a married couple if one of them earns a stable and significant income. If both the partners earn enormous amounts and have a stable income source, then filing tax returns separately is more profitable.

How to file ITR online for self-employed individuals?

If you are thinking about how to file ITR for self-employed, then here are the ways:

  1. The first thing you need to do for filing an income tax return is to go to the e-filing portal of income tax, that is,www.incometaxindiaefiling.gov.in.

2. Next, you need to login into the portal by entering your user id and password along with the captcha code. The next step is to click on the login button.

3. Once you are redirected to the page, click on the e-file menu directly and click on the link income tax return system.

4. Click on the continue button and read the instructions carefully before filling in the mandatory information in the ITR form for self-employed.

5. Choose the right verification option that you will find in the tax paid and verification tab.

6. From there, you need to choose any one of the options for verifying your income tax to join.

7. Next, click on the preview and submit button and verify all the data you have just entered in the ITR.

8. Click on the submit button.

9. Choose the option, “I would like to e-verify.”

10. After choosing that option, for your e-verification next, you need to enter the OTP when asked.

11. Once the OTP is entered, it will be auto-submitted.

Types of ITR forms

ITR or Income Tax Return is a form in which individuals/businesses file tax information to the Income Tax Department at the end of the financial year. It is categorised into various structures of legal documentations like reports pay, costs, and other relevant duty data. The ITR forms vary from person to person and the category of the individual. The assessment forms simplify it for individuals on how to ascertain the filing of income taxes. The individual can pay the amount in instalments and can get discounts on the taxes. All the citizens who file income tax return forms need to fill before assessing the profits.

There are nine different income tax returns for different types of taxpayers based on their source of income, total income, and category. The different types of ITR are categorised as follows:

  • ITR-1
  • ITR-2
  • ITR-2A
  • ITR-3
  • ITR-4
  • ITR-4S
  • ITR 5
  • ITR 6
  • ITR 7

ITR 1 is also known as Sahaj and used by salaried and pension Indian residents. ITR 2 applies to individuals and HUF and has more than Rs 50 lakh income. ITR 3 is also for the individuals and HUF who have business, profession, unlisted equity shares investment, individual directors of the company. ITR 4 is for individuals, HUFs, and partnership firms earning an income from business or profession.

Income tax return papers with pencil, paperweights, mobile and calculator

ITR 5 form applies to firms, co-operative societies, Limited Liability Partnerships, Local Authorities, Body of Individuals, Estate of Deceased, Investment Fund, Artificial Judicial Persons, Business Trust, etc. ITR 6 is filed electronically by the companies who have an income from charitable or religious property. ITR 7 form applies to political parties, charitable and religious societies, medical institutions, and colleges and institutions.

E-filing Strategies for Self-Employed

1. Understanding the tax process: A self-employed individual is an individual who doesn’t have a fixed income every month. A self-employed individual doesn't have a fixed salary every month from a company and doesn’t work for any organisation or business-like property dealers. The correct ITR forms for self-employed people are ITR 3 and ITR 4. Choosing the right ITR for self-employed is an essential step in filing the income tax return.

2. Guaranteeing costs to decrease the payment: The guarantee costs are provided to self-business individuals to reduce the yearly payment for taxes. It helps self-employed individuals to cope up with their payments and expenses.

Thus, to conclude, we can say that ITR filing is not as complicated as it seems. If you follow the correct steps, you can do it without any hassle. The structure of ITR is dependent on the income earned by the individuals. The information on the tax deductions of joint property owners and individuals is mentioned above in the article.

Also Read:

1) How Do Business Taxes Differ From Personal Taxes?
2) Why Do We Pay Income Tax in India? Importance, Applicability & more
3) Provisions for Income Taxes in India Applicable for Salaried People.
4) OkCredit: All you need to know about OkCredit & how it works.


Q. How to pick the right ITR?

Ans. For self-employed people, the correct ITR structure would be ITR-3 or ITR-4. It is essential to select the right ITR system for advance e-documentation of your expense forms. Choosing the right ITR for individuals is a significant step in filing the income tax return. Likewise, it is also essential to know the correct deductions and exemptions for ITR filing.

Q. How to claim a refund on TDS?

Ans. Tax-deductible at source is 10% on the instalments made to you. The salaried individuals can claim the refund on the TDS, deducted for your benefit through the interaction of e-filing of your expense forms.

Q. How do the co-owners decide on the shares in a joint property?

Ans. The contribution of the co-owners of a particular property is used to identify the ratio of their respective shares.