Legal Dispute May Arise If Parent Is Co-Owner

Jason Yumnam, Bengaluru

I work as a software professional in Bengaluru. I want to buy a plot of land for residential purposes at my native place in Manipur. But the bank where I have my salary account for the last five years is unwilling to extend the loan for multiple reasons. First, it is for a plot of land, and second, my ancestral village is close to the international border. Should I get my father as a co-applicant and get the loan sanctioned from the rural bank in my hometown? In that case, will my brother and sister also have claim on the land as my father will be a co-applicant along with me?

As your bank from which you draw your salary is not willing to sanction the loan, it would be better to apply for the loan from a rural bank in your hometown in your own name with your father as the guarantor or surety rather than as a co-applicant. This will avoid any dispute from your siblings.

However, if your rural bank is not willing to sanction the home loan solely in your name, then you can look at having your father as the co-applicant, provided the bank is not insisting that he should also be a co-owner.

Ensure that all the payments and repayments happen from your bank account and your own income and not from your father’s bank account. This is to prove that the land has been purchased with your money.

If he becomes a co-owner, then he will need to nominate you and write a Will where his share of this property is willed to you. There is, however, no guarantee that legal disputes will not arise in this case.

So, avoid buying the property with your father as a co-owner.

Suhel Chander, CFP CM Handholding Financials

Venkat A, Pune

I am 55 years old and work in the private sector. I want to take early retirement in the next six months. My annual salary and expenses come to Rs 20 lakh and Rs 10 lakh, respectively. My wife is a homemaker. I have a 26-year-old son who is currently doing a full-time masters in commerce after working for three years. So, I do not expect more expenses on his education. However, I need to account for his wedding expenses four years later. I would not have much gratuity since I started my current job in 2015. Our total investments come to about Rs 5.92 crore.

Out of my mutual fund debt investment, Rs 33,54,000 have completed three years. Rest Rs 82,45,000 would need two more years to complete three years for indexation purposes. I come in the highest tax bracket while my wife does not have to pay any tax. How can I generate regular income from my current investment for monthly expenses? I can reshuffle accordingly.

You have investments across all the asset classes. Based on your expenses, you would require emergency fund up to one year of expenses, which you can get from your debt fund.

For your son’s wedding you can utilise the maturity proceeds from your bank FD, or company FD, National Savings Certificate (NSC) or part of your debt mutual fund and gold investment. For your retirement needs, consider shifting and dividing the investment in your and your wife’s names for tax efficiency. You can consider reshuffling part of your investment in your wife’s name and in your name in 2-3 hybrid mutual funds with 65 per cent equity exposure with systematic withdrawal plan (SWP) so that this withdrawal income is tax-efficient with 10 per cent on long-term capital gain. For instance, if you reshuffle only Rs 2 crore (in the above mentioned proportion from indexed debt mutual fund, equity mutual fund, part of stocks and stocks options all put together, this will reshuffle your investment in a tax-efficient way.

Do note that on reshuffling the investment from your corpus to your wife’s, 10 per cent capital gain for equity and 20 per cent capital gain on debt fund with indexation will be implied, which will have effect on your taxation. Though indexation benefit has been removed on long-term capital gains from debt funds from FY23, earlier investments will still get the benefit. The Rs 2.5 crore invested in hybrid mutual fund will last for next 35 years, and you can leave a legacy for the next generation.

Hina Shah CFPCM Financial coach, Luhem