Agreement should be on stamp paper .
2) mother should declare loan given in her tax returns
3) you can sign as witness
4) get it drafted by lawyer
Advice on loan from mother to son for flat purchase
My wife and son (independent, unmarried and employed) are planning to purchase a resale flat in Bangalore. I (husband and father) am not contributing for this. We thought of taking a bank loan but dropped the idea, and decided to buy from own funds for many reasons (not relevant to the question). My wife is contributing nearly 80% of the cost with my son giving 20%. Both sums are from their savings. Now we are thinking of increasing son's contribution by another 15 to 20% without taking external loan. That is by taking a loan from mother and paying that as extra share. I read that my son can only take tax benefit only on the interest portion of this loan from mother, so it may be just principal or with some nominal interest rate, that we will decide later. No intention to make profit on this loan. I saw some loan agreement formats on the Internet but they are for formal loans. Here we want to draw up a simple agreement stating sum, duration of loan (10 years) , terms of repayment, interest (if applicable) and mutually convenient clauses, so that no one is under duress. But an agreement is needed to account for how and why money is coming to mother's account and for son to claim interest rebate ( if the loan is with interest). Questions 1. Does this agreement have to be on stamp paper or just typed out and signed? 2. Any tax/legal issues with this arrangement? If interest is taken, mother will give a yearly statement to son and show it in her IT returns too. 3. They will both sign on the sale deed and registration. Can I also sign both on sale deed and registration, though there is no financial contribution from me? (I think yes, but just to be sure). 4. Anything else, I should be considering?
Asked 4 years ago in Property Law
Religion: Hindu
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4 Answers
1. This agreement should be on stamp paper , and if possible registered the same
2. Yes , mother can show the amount of gift in her ITR
3. You can be a witness in the sale deed
1. The loan agreement with the specified conditions can be entered into in a non judicial stamp paper which would be more effective and also accommodate all your conditions accordingly.
2. The mother has to show it in her IT returns because it is an income to her from other sources, the son no doubt can claim rebate due to this interest he pays to his mother.
3. If you want the property to be registered only their both the names, then what is the necessity to include your name in the registered sale deed.
Moreover you say that there is no contribution from your side towards the sale consideration amount paid to the seller, in my opinion this may not be advisable, let the property be registered exclusively on their names alone.
1. Stamp paper or payment of online stamp duty.
2. Yes taxes as per individual slabs
3. Yes
