- Date : 11/09/2023
- Read: 3 mins
Perhaps the most important benefit of home loans is their tax benefits. Read on to learn more about joint home loan tax benefits.
Can home loans be taken jointly? What are the income tax benefits on home loans taken jointly? If you have such questions, look no further!
Highlights -
- Joint home loans offer higher tax benefits to co-owners individually.
- Both co-ownership and co-borrowing are necessary for joint home loan tax benefits.
- You can claim deductions on principal and interest payments under Sections 80C and 24(b).
Income tax benefits on home loans taken with joint ownership
Joint home loan benefits with respect to taxation can be availed through the following sections of the Income Tax Act, 1961 -
- Section 80C - Under this section, co-owners can individually claim a deduction of the principal portion of their joint home loan of up to Rs. 1.5 lakh from their taxable income. This means each co-owner can enjoy a tax benefit of up to Rs. 1.5 lakh separately, effectively doubling the tax advantage.
- Section 24(b) - Joint owners can claim deductions on the interest paid towards the joint home loan for a self-occupied property, up to a maximum limit of Rs. 2 lakhs each per year. The ratio of ownership determines the proportion of the deduction claimed by each co-owner.
- Section 80EE - This section offers an additional deduction of up to Rs. 50,000 on the interest paid toward the home loan. However, it applies only to first-time home buyers, subject to certain loan amounts and property value limits.
Also Read - Section 80EEA: All you need to know about deduction for interest paid on home loan for affordable housing.
Conditions for claiming joint home loan tax benefits
To claim tax benefits on home loans with joint ownership, certain conditions must be met -
- Co-ownership: All individuals applying for a joint home loan must be co-owners of the property. Only registered property co-owners are eligible for joint home loan tax benefits.
- Co-borrowers: Co-owners must also be co-borrowers of the home loan. If someone isn't contributing to the EMI, they won't be eligible for tax benefits.
- Completed Property: No benefits are applicable for under-construction properties. Tax benefits on home loans with joint ownership can be claimed once the property's construction is complete. However, pre-construction interest on the home loan can be claimed in five equal instalments under Section 24(b), starting from the year of completion.
Tips for maximising tax benefits
- These income tax benefits on home loans are applicable only under the old tax regime. So, if you wish to avail the joint home loan tax benefits, stick to the old regime.
- To secure the most favourable interest rates on joint home loans, all co-applicants must be employed with a steady income.
- Stamp duty and registration charges can also be claimed by joint owners.
Find the latest articles on loans here.
Also Read - Planning To Take A Home Loan? Know Why You Should Stick To The Old Tax Regime.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
