Joint Home Loan Tax Benefits

When you want to turn your dream of becoming a homeowner into reality but do not have the necessary funds to do so, you can always go for a home loan. 

But, if you think that your own personal eligibility is not sufficient, you can always get a co-applicant on board and own a home in a joint partnership with them. For doing so, the Indian government rewards you through various tax benefits you can claim. 

Read on to learn all about joint home loan tax benefits.

A few conditions you must meet to claim tax benefits on a home loan for joint owners include the following:

• The home must be fully constructed

• You must be a co-owner of the home

• You need to be a co-borrower of your home loan

Make sure you meet the aforementioned criteria for availing home loan tax benefits for joint applicants. While opting for a home loan in joint name, tax benefits you can enjoy are many. To that end, here are a few tax benefits for joint home loans.

Here are the two most important tax benefits available according to the Income Tax Act of 1961:

• Section 24

Under this section, you and the co-owner are eligible to claim tax deductions of up to ₹2 Lakhs during every financial year. Note that you can claim this on the interest component of your home loan until your tenure ends. 

However, you and your co-owner must occupy the house if you want to enjoy this type of tax deduction. 

• Section 80C

Under this section, you and the co-owner can claim a tax deduction of ₹1.5 Lakhs each and every year on the principal component of the housing loan until the loan maturity.

To avail tax benefits, both individuals need to be co-owners of the property. These co-borrowers can claim a tax rebate on their proportion of shares. This simply means you must take into consideration your and your spouse’s repayment capacity when planning the share of a home loan.

In simple words, even if co-borrowers are equal but their loan share is 60:40, note that tax benefits will also be shared in a similar manner. If this ratio is changed to 70:30, even tax benefits will change accordingly. 

Simply put, if you are included in a higher tax bracket, you must opt for a higher loan ratio to save tax. Ideally, it is advisable to not change the loan share and keep it constant throughout the loan tenure.

Some essential pointers you must keep in mind include the following:

• When it comes to joint home loans, the tax benefits claimed by you and the co-owner are divided

• The division of tax exemption will be based on the ownership ratio of the loan

• You need to avail the home loan in the name of two owners

• The ownership ratio must be expressed in percentages and clearly mentioned in papers

The bottom line is if you buy a home jointly with a family member of yours or your partner, you can avail joint home loan tax benefits. If you want to learn more about housing loans and various other tax benefits, you can do so on Bajaj Markets. 

There are forms of credit available on Bajaj Markets, such as personal loans, home loan balance transfer, and other options. 

Furthermore, you can use a home loan EMI calculator to compute EMIs well in advance, helping you plan your finances better. You can even check your CIBIL score for free if required.