Joint Home Loan Tax Benefits

Joint Home Loans allow borrowers to increase income tax savings, as each financial co-applicant is eligible for the deduction, provided the other conditions are met. Here is how financial co-applicants stand to gain through a joint Home Loan:

• Section 24):Financial co-applicants and co-owners can claim up to a maximum of Rs.2 Lakh on the interest component of the Home Loan repayment amount paid that year. The total deduction for the interest paid will be allocated between all co-owners based on the ratio of ownership.
• Section 80C: Financial co-applicants and co-owners can claim up to a maximum of Rs.1.5 Lakh on the principal component of the Home Loan repayment amount paid that year, till the end of the Home Loan repayment tenure.
• Section 80EE: Each co-borrower can claim tax deduction of up to Rs.50,000 provided they both are first-time homebuyers. However, the property value should not exceed Rs.50 Lakh and the loan amount should not be more than Rs.35 Lakh.

Also Read: Know about Tax Benefits on a Home Loan

Suppose Arjun and Neha, a married couple, purchase a flat jointly and take a joint Home Loan.

Both are named as co-owners of the property and co-borrowers of the loan, and they share the EMI repayment equally.

During the financial year, the total interest paid on the Home Loan amounts to Rs.4 Lakh, while the total principal repaid is Rs.3 Lakh.

If Arjun alone had taken the loan, the interest deduction for a self-occupied property would have been capped at Rs.2 Lakh, leaving a portion of the interest without tax benefit.

However, because this is a joint Home Loan, both Arjun and Neha can claim deductions separately in proportion to their repayment share:

• Arjun claims Rs.2 Lakh as interest deduction under Section 24(b)
• Neha claims Rs.2 Lakh as interest deduction under Section 24(b)

This allows the entire Rs.4 Lakh interest paid to be claimed across two tax returns.

Additionally, both can claim principal repayment deductions under Section 80C, up to Rs.1.5 Lakh each, subject to individual limits and actual repayment.

You should co-own the property:You can claim tax benefits if the property is in your name and you are the one paying EMIs, even if you are a joint owner.

You must be a co-borrower: Besides being an owner, you must also be the loan applicant as per the documents. Owners who do not contribute to the EMI cannot avail of the tax benefits.

The property must not be under construction: You can only claim tax benefits on a fully constructed house. Any expenses prior to completion of construction are claimed in five equal instalments starting the year in which construction is complete.

Also Read: Know about Income Tax Slabs

Joint Home Loans have many advantages besides sharing the responsibility of paying back the loan. One of these benefits is the tax benefits that come with it. Both co-applicants can claim income tax deductions individually. The benefits of joint Home Loans include:

1. Maximum tax savings of Rs.1.5 Lakh under Section 80C

2. Maximum tax savings of Rs.2 Lakh under Section 24(b)

3. Home Loan tax benefits of Rs.50,000 under Section 80EE

4. Increased loan eligibility

With a joint Home Loan, both co-applicants can claim the principal component of the EMI under Section 80C, up to a maximum of Rs.1.5 Lakh per financial year, and the interest component of the EMI under Section 24(b), up to a maximum of Rs.2 Lakh per financial year. If the construction of the home is not completed within 5 years of the loan commencement, the eligible amount is reduced to Rs.30,000. As first-time homebuyers, you can also claim additional tax benefits on interest payments under Section 80EE, up to a maximum of Rs.50,000 per financial year, provided the value of the property is not more than Rs.50 Lakh and the Home Loan is not more than Rs.35 Lakh.

Additional Read: How to Save Income Tax under Sections 80C, 80D, and 80G?

A woman co-applicant with a better repayment history or credit score can help you enhance your loan eligibility. These benefits not only reduce your income tax obligation on Home Loan but also help you fulfil your dream of buying a house.

• To claim tax benefits on a joint Home Loan, you must be a co-owner in the property
• Tax benefits can only be claimed if you are a co-borrower for the loan
• The Home Loan should be availed of in the name of both the co-owners
• The tax benefit that is claimed is divided between the co-owners

To make the most of join Home Loan tax benefits:

• Ensure that all borrowers are also registered co-owners of the property, as tax benefits are available only to those who are both co-borrowers and co-owners.
• Split EMIs clearly between co-borrowers, since tax deductions can be claimed only in proportion to the actual loan repayment made by each person.
• Claim interest deduction under Section 24(b) individually, allowing each co-owner to avail the predetermined limit for a self-occupied property.
• Use Section 80C benefits for principal repayment, where each co-owner can claim deductions within the overall Section 80C limit based on their share.
• Maintain proper documentation, including loan interest certificates, ownership papers, and proof of EMI payments, to support individual tax claims.