How to Claim Tax Benefits on Joint Home Loans

For many people, a home is a ‘once-in-a-lifetime’ investment – and so, it is only natural that one would want to make it big. Opting for a joint Home Loan is not only beneficial in acquiring a larger house but also in reducing the overall cost owing to tax benefits. By applying for a  Housing Loan jointly, one can avail of the tax benefits on joint Home Loans provided both the co-applicants are co-owners of the property and are contributing individually to the loan repayment. Having said that one might wonder how to claim these tax exemptions and how it works. Fret not – read on to know about the various types of tax benefits on Home Loan and the conditions to claim those.  

What are Tax Benefits

Tax benefits are a great way to reduce tax liability. These benefits range from tax credits and deductions to exemptions and exclusions. Tax benefits on a joint Home Loan can be availed by all co-owners. Those who have a joint home loan are eligible for tax benefits under the Income Tax Act.  

Types of Tax Benefits on Joint Home Loans 

Joint Home Loan tax benefits are primarily of two types. These are as follows – 

1. Home Loan Tax Benefits for a Self-occupied Property 

In the case of a self-occupied property, both the co-owners, who are also co-applicants of the joint Home Loan can claim a tax deduction of up to INR 2 Lakh annually on the interest paid towards the Home Loan under Section 24b as part of their Income Tax Returns.  

2. Home Loan Tax Benefits for a Rented Property 

Homeowners are eligible for a deduction of up to INR 2 Lakh on the Home Loan interest under Section 80C of the Income Tax Act provided the owner or one of the family members resides in the property. This also applies in cases of vacant houses. In case the property is already rented out, the entire Home Loan interest can be deducted from taxes. Tax exemptions of up to INR 1.5 Lakh are also available on the repayment of the principal loan amount.  

When talking about tax benefits on Home Loan, planning the whole tax rebate in a way that benefits both the owners is crucial. Professional assistance from a reputed financial advisor in this matter is highly recommended.  

Conditions for Claiming Tax Benefits on Joint Home Loans

Listed below are some of the conditions that all individuals holding a joint Home Loan must fulfil to claim tax benefits on Home Loan –  

1. Both Must be Co-owners of the Property 

Only those individuals who are co-owners of the property are entitled to receive tax benefits on joint Home Loans. In certain cases, where the loan has been taken by multiple borrowers, only those who are registered owners of the concerned property can claim the tax benefits on joint Home Loans.  

2. Both Must be Co-borrowers of the Housing loan 

Co-owners of the property against which the joint Home Loan has been taken must also be co-borrowers to be eligible for tax benefits. Any borrower who is not paying any amount towards the Home Loan EMI shall not be able to claim tax benefits on joint Home Loans. 

3. Construction of the Property Must be Complete 

The property against which the joint Home Loan has been taken must have been fully constructed for the individuals to claim tax benefits. These benefits can be availed of from the very beginning of the financial year in which the construction has been completed. For properties that are still under construction, such tax benefits shall not be applicable. Furthermore, funds spent on the property even before the completion of its construction can be claimed in five EMI cycles starting from the year of completion of the property construction. 

Things You Should Know About Tax Benefits Against Joint Home Loans

Here are some of the important things one should keep in mind when claiming tax benefits on Home Loans – 

• Tax benefits on joint Home Loans are divided among the co-applicants so both can enjoy the tax deductions and exemptions individually. 
• The proportion of the division of tax exemptions is determined on the basis of the ratio of the ownership of the Home Loan taken jointly. 
• Each applicant can claim the maximum tax rebate through a Home Loan worth INR 1.5 Lakh and up to INR 2 Lakhs for the principal amount of repayment. 
• Most importantly, the Home Loan must be taken in the name of both the individuals i.e. the co-applicant and co-borrower. 
• Each individual’s entitlement in the joint ownership must be clearly mentioned in percentage.  

Read Also: 8 Different Ways to Avail Tax Benefits on Home Loans 

How to Use a Joint Home Loan Tax Benefit Calculator

One of the easiest and fastest ways to get an estimate of the joint Home Loan tax benefits is to use an online calculator. A joint Home Loan tax benefit calculator is a custom-made tool that uses some basic details to provide an estimate of the following – 

• Total Income Tax Benefit 
• Income Tax Amount Payable Before Home Loan 
• Income Tax Amount Payable After Home Loan 

The home loan tax benefits calculator FY 2024-25 works based on the following details provided –  

• Financial year  
• Category of the applicant (Male/Female/Senior Citizen/Super Senior Citizen) 
• Annual income scaling up to INR 5 Crores 
• Interest paid on the home loan 
• Principal amount repaid on the home loan 

Just as you enter the above details and hit the ‘Apply’ button, the tax benefits on joint Home Loans shall be displayed. The calculator can thus be used to assess one’s net liability and tax savings by taking the gross annual income, housing loan payments, and total claimable deductions. 

Reasons to Use a Home Loan Tax Benefits Calculator

Here are the top reasons to use a joint Home Loan tax benefit calculator – 

• Ease of accessibility 
• Faster calculations on-the-go 
• Accurate estimates with zero errors  
• Guarantees safety and security by keeping the applicants’ details private 

Who Can Apply for Joint Home Loan Tax Benefits

Tax benefits on joint Home Loans can only be availed of by co-applicants, who might be a family member or a close relative, such as a parent, sibling, spouse, son, or unmarried daughter. It is mandatory for the co-applicant to provide a PAN Card or Form 60, KYC documents, income proof and documents related to the joint Home Loan taken when filing a claim for tax benefits Home Loan.  

• KYC Documents – Aadhaar card/PAN card/Driving license/Passport/Voter’s ID etc. 
• Income Proof – last 3 years’ salary lip and 6 months’ bank account statement (for salaried individuals) and last 5 years’ business revenues and 6 months’ bank account statement (for self-employed individuals) 
• Statement of Income Tax Returns  

Note: Additional documents might be required during loan processing.  

Conclusion

Applying for a home loan jointly not only brings down the financial burden but also exposes the borrowers to a host of tax benefits and exemptions. As discussed, tax benefits on joint home loans can be claimed under Section 24b and Section 80C of the Income Tax Act whether the property in question is self-occupied or rented out provided the conditions stated above are met. However, in case one is unsure of the tax deduction amount, a joint home loan tax benefit calculator on the go can always prove helpful. Nevertheless, consider discussing the nitty-gritty of the claiming procedure with a reputable and experienced financial advisor before diving in.