Joint Home Loans
Most of the people opt for joint home loans to enhance their eligibility. It can be done with your spouse, parents or another member of the family. As two people together apply for one loan, Bankers consider them more eligible as they both will contribute to EMI. Hence it enhances your eligibility, on the other hand, you can choose a bigger and better house.
These were some of the advantages of having a joint home loan, but do you know when you opt for a Joint home loan, you can also avail tax benefits. Repayment of the home loan and claiming for the tax benefits on such joint home loans has to be done in a particular ratio.
Let us first understand the conditions on which The Tax benefits on joint home loan can be availed.
You must have a Co-owner:
To be able to claim extra tax benefits for a home loan, you must have a co-owner for your property. When you are not aware, it may happen that you opt for a joint home loan, but your co-borrower is not a co-owner of the property. In such a case your co-borrower cannot claim tax benefits for the same loan.
You must be a Co-borrower:
If you are a co-owner but you are not a co-borrower, then in this case also you are not eligible to avail the extra tax benefits on your home loan.
Being a co-borrower is not enough. To avail the benefits you need to be a co-borrower as well as a co-owner of the property.
The Property Construction must be Completed:
Tax benefits on a property can only be claimed in the financial year in which the construction of the property has been completed. No tax benefits can be availed for an under-construction property.
However, expenses prior to completion can be claimed in five equal instalments. This can be done in five years, one can claim it from the year in which construction is completed.
Income Tax Benefits on the Joint Home Loans
One can save ₹ 2lakhs on the Interest:
Each joint owner and borrower for a home loan can claim a tax deduction of ₹2 lack on the interest paid. To avail this, the property should be a self-occupied one. Each of the owners can claim ₹2 lakhs in their tax return.
The total interest is allocated for the tax benefit between them is based on their share of ownership. In case no percentage share is specified, the interest portion of the EMI is split equally. And then both can claim a tax deduction up to a maximum to ₹ 2lakhs.
But, in the case when the property is rented, there is no maximum limit on deduction applicable to the interest paid.
Deduction under 80C on the Principal Repayment:
You must be aware of Section 80C, under this section of the income tax act one can save 1.5 lakh. This is applicable for investment, education and home loan principal repayment too. Each of the co-owner who is co-borrower as well can claim deduction towards the principal repayment on the EMI paid towards the home loan under section 80C.
Deduction on Registration and Stamp duty Charges:
Joint owner who are co-borrowers can split the costs of registration and stamp duty and claim for tax deduction under Section 80C.
We already mentioned that tax deduction on the principal portion is also applicable under this section. But payment made towards registration and stamp duty is also eligible for deduction under section 80C. But this can only be claimed in the year in which you purchased the property are made the payment.
Under Section 80 EE
Tax benefits under this section can only be availed by the first time home buyers. Deduction of ₹50,000 is possible under this section but, to avail this your home loan amount must not exceed ₹35 lakhs. And the cost of the home must not exceed 50 lakhs.
Most of us are unaware of this. And hence we end up paying more taxes, which could have been saved. Remember joint home loans not only increases your eligibility but it can also provide extra tax benefits to you. Hope this blog will help you save some money if you are already a co-borrower. Or in case you are planning to get a home loan, add a co-borrower to your loan and keep the same person as a co-owner for the property. Doing this is definitely going to help you.