The tax benefits are available for all the joint home loan owners. It is relevant to note that to avail tax benefits against the property, the ownership in the property is a prior condition. You will have to be an owner of the property to be entitled to get tax benefits. There are situations in which a property is owned by the parent, and the parent and child together take a loan, which is to be paid off by one of them. In these cases, the child will not get any tax benefit as he/she is not a co-owner.
Therefore here are some conditions that will allow you to claim the tax benefits on the property :
1) Co-owner of the property –
To avail of any tax benefit for a home loan, you’ll have to be the owner of the property. If you’ve taken a loan jointly, but you are not an owner as per the documents, then you may not be able to claim tax benefit.
2) Co-borrower of the loan –
According to the documents submitted, you’ll not only have to be a co-owner but also you have to be a co-borrower of the loan. If you are an owner but not a borrower who has to contribute to the EMI, then you’ll not be availed for the tax benefit.
3) Construction of the property should be completed –
A house property can claim tax benefits in accordance with the financial year in which the property was completed. For property under construction, tax benefits will not be granted.
For a self-occupied property, the co-owner who is also a co-borrower of the loan can claim up to a maximum of Rs.2,00,000 deduction in their Income Tax Return. According to the ratio of their ownership, the total interest is divide into the owners. Each of them can claim for interest benefit of Rs2,00,000 maximum. But the total interest claimed by them can not be more than the total interest paid by them for the loan.
For rented property, the reduction that can be claimed is restricted to the amount to which loss from this type of property won’t be more than Rs.2,00,000.
Both of the co-owners can claim a deduction up to Rs.1,50,000 for the repayment of the principal under section 80C.
Hence, as a family, you’ll be able to claim more tax benefits against interest that have to be paid on a home loan.
If your co-borrower is not contributing any payments for paying the entire loan installment, then you can claim the entire interest as a deduction in your Income Tax Return. Charges for stamp duty and registration can also be claimed by the joint owners.
Things You Should Know About Tax Benefits Against Joint Home Loans (In a nutshell)
- In a joint home loan, the tax benefits are divided among the co-applicants. So, more than one person can enjoy tax benefits.
- The ratio of ownership decides the proportion of the division of tax exemption.
- Each applicant can claim tax rebate individually via the home loan, which is Rs 1.50 lakh per person and up to Rs 2 lakhs for principal amount repayment.