Investments are a crucial aspect when it comes to savings for major goals. On family terms, it is sometimes a lot easier to manage your investments on a joint basis, either with your siblings or more commonly with your spouse. From here arises the idea of joint account holdings, where two or more individuals can open an investment or savings account in a financial intermediary and be able to access and manage their transactions together. However, there are certain complications when it comes to costs of maintenance one should be aware of.

Taxations on Joint Account Holdings

The taxation on joint account holdings is relatively less complicated when the primary owner is the only earner, and the other individuals with access either on survivorship basis or financial terms, are dependent or do not have a steady income of their own. This makes the tax implication easier such that the primary holder of the account is the source of taxation, and any withdrawals made thereof by other individuals with access are not taxed and are merely considered as tax-free gifts under most regional laws.

However, the above condition applies to distant relatives in most cases. In case of spouse and investment-based joint holdings, any gains made on the investments or withdrawal made by the spouse would be taxed under the law.

Following are some of the mechanisms of savings and investments which are briefly discussed under the light of joint holdings:

Banks

In banks, the joint account holdings refer to usually the savings related accounts that are held by relatives, mostly spouses. The complication occurs usually in terms of taxation and otherwise is a simple straightforward process. The taxation would, therefore, be applied on withdrawals in the name of the primary holder if the holder is the only source of income that falls under the taxable income brackets. However, if both the individuals of the joint holdings are salaried or have stable sources of income, they would be taxed more on the entire savings than they would normally be on an individual basis. Unless the holding merely extends access to the account to another individual.

Shares and Mutual Funds

In terms of shares and mutual funds, the loss harvesting technique is useful for tax savings and reducing the payable taxes on income and gains. However, in terms of joint holdings, the taxation is applicable to the capital gains acquired over the span of time. Yet, the taxes are only payable when the gains are realized, that is, when the assets are sold off or liquidated, only then the taxes become applicable. Therefore, under the joint holdings, if the overall position on the portfolio is a loss, the taxes on gains are, therefore, canceled out by the losses incurred on the portfolio.

Joint Property Holdings

Joint property holding is a mechanism of two or more parties jointly owning a property, also referred to as joint tenancy. In terms of taxation, the complications and large tax sums can be avoided by the individuals if they divide the ownership of the income generated by the property, thereby reducing the per head taxable amount. Joint tenancy makes it easier for individuals to possess the property and be able to pass it on in terms of a deceased partner in the tenancy partnership. Jointly held property is, therefore, taxed on a separate basis, hence is a better option to consider in terms of property purchases as opposed to solely owning properties.