Release Deed for co-borrowed and co-owned home property

Release Deed for co-borrowed and co-owned home property

Hi, I and my brother have purchased a home property jointly with co-ownership by co-borrowing the home loan. We manage the property with 50%-50% ownership and 50%-50% repayment.

Now, we have agreed that I will sell-off my portion of 50% ownership to my brother and my brother will pay 50% of property value to me. We have decided to execute Release Deed to transfer the 50% ownership of property from me to him with formal payment.

However, my brother want to continue with home loan and he is ready to take the ownership of remaining home loan. We are looking for removing my name from home loan as co-borrower. Home Loan bank is having issue for removing my name as co-borrower and transferring the complete ownership of Home Loan to my brother.

Request guidance with the options to transfer Home Loan to my brother along with transferring the home ownership to my brother with appropriate payments through formal process?

Asked 5 years ago in Income Tax

If you are going to relinquish your rights in property you will have to pay capital gain on such transaction as relinquishment of right comes under the definition of transfer.

The bank must be doing this because they want to keep the loan file strong and not reduce the loan paying capacity and so it won't affect you much as you would have transferred the ownership so just make your brother the first person in loan and it should be fine even if the bank is not removing your name.

I would suggest you to transfer it as gift to your brother which would save it from capital gain tax.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo

CA, Jaipur

4279 Answers

97 Consultations

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Talk to Naman Maloo

The person selling the share of house will be liable to capital gains depending on the period of holding of house short term or long term.

Its actually a banks prerogative whether to accept other person for loan liabilities. There are various documents and credibility been seen while giving a loan by bank .

If the relations between brothers are healthy, you can internally enter an agreement for transfer of loan, not keeping bank in loop. Every months do an auto transfer if loan amount from brother account to your account for loan repayments.

Another options is you repay the entire loan from borrowings from your brother or third party source. And your brother enters into a fresh loan agreement with bank.

Jasmina Jain Shah

CA, Greater Mumbai

454 Answers

4 Consultations

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Talk to Jasmina Jain Shah

- Repay the entire loan amount from the proceeds of the sale of 50% ownership and submit copy of release deed alongwith new registry papers. Bank will be compelled to remove your name.

Vivek Kumar Arora

CA, Delhi

4853 Answers

1047 Consultations

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Talk to Vivek Kumar Arora

Hi,

If you have co-borrowed the loan with 50-50 ownership, then you can repay your part of the loan from the proceeds you are gonna get from your brother and then bank will be compelled to remove your name.