The person while buying the properties should not be confused with the joint names which are mentioned in the conveyance deed. There may be joint names of two or more than two persons in one single property. Such names are also reflected in the conveyance deed. But, generally, the income from the property is not divided in the names of those two or three persons appearing in the conveyance deed as owners. This aspect is quite important particularly because of the fact that joint purchase of the property and joint names in the property are altogether two separate connotations.

Whereas the joint name in the property implies that there appears the name of more than one person in the property, but for tax purposes the other person may not be treated as the owner of the said property. Reversely , the joint purchase of the property implies that the property in question is purchased in the names of two or more than two persons and that purchase is so planned that the tax liability either under the Income-tax Act or Wealth-tax Act remains separate on both the joint purchasers of the property. Certain aspects of tax planning have to be taken into account to achieve this objective.

The most important care which is to be taken while effecting joint purchase of properties is to ensure that each co-owner whose name appears in the conveyance deed for purchase of a joint property makes his or her contribution from own funds or own source for buying the property . Besides, the investment by each joint purchaser of the property must be prorata in tune with the percentage of ownership in the property. Hence, it implies that in the conveyance deed or the sale deed there must be a very specific mention of the percentage of ownership by each joint purchaser and that each joint purchaser must contribute the money in the purchase of the property in the same ratio in which the joint purchaser holds the property. Taking care of this aspect would ensure a separate Income Tax liability and Wealth-Tax liability on each of the joint owners of the property.

However, if one of the joint purchasers is short of money to match his or her contribution prorata in the ownership of the property, in that event the difference of amount could be treated as loan from the other joint purchaser or from any other person who may not necessarily be the joint purchaser. In case the loan is taken from a close relative, a reasonable rate of interest must be charged on the loan amount. For example , if the husband and wife both are the joint purchasers of one single property and the wife is short of say Rs 2 lakh, she may take a loan from the husband at a reasonable rate of interest, rather take a gift from him.

This is because of the fact that if a gift is taken from husband and joint purchase of property effected then due to the clubbing provisions as enshrined in section 64 of the Income Tax Act, the income and wealth falling to the share of the wife will be added to that of the husband.

In case of joint purchase of property in the name of a minor child, the income, if any, arising to the minor child as a result of rent from joint purchase of property, would be clubbed with the income of the father or the mother whoever has higher income.

Another aspect regarding the joint purchase of property by the professional persons relates to Income-Tax treatment in the event of property being given on rent. Section 26 of the Income-Tax Act, 1961 which deals with house property taxation in respect of a property owned by co-owners makes clear the issues arising out of co-ownership of properties. The provisions of the act would apply to properties jointly owned with shares which are definite and ascertainable. Hence each of the joint owners of the property would be entitled to tax deduction from the house property income in respect of his or her share in the property as if the property was owned by him individually.