One of the most attractive benefits of taking a home loan is that they help you save tax, while you prepare to invest in a fixed asset. Acquiring a home loan makes you eligible for tax rebates under Section 80C and Section 24 of the Income tax regulations.

Highlights

  • Tax benefits get divided among co-applicants in case of a joint loan
  • The division takes place in the same proportion in which the asset is owned by each co-applicant
  • Each co-applicant can claim a maximum tax rebate of up to Rs. 1.50 lakh (One Lakh up to AY 2014-15) for principal repayment and Rs. 2 lakh (1.50 Lakh up to AY 2014-15)) for interest payment.
  • The very first condition is the house property has to be bought by the individuals jointly, and this should be in their joint names.
  • The share of each holder should be clearly mentioned so that there is absolute clarity on the percentage ownership of each co-owner.

Tax benefits of Home LoanOverall there are two types of tax benefits that are available on the repayment of a housing loan.

1. Interest paid on  loan is eligible for a deduction up to Rs. 2 lakh per annum from the  income of the individual under Sec 24 when the property is self-occupied or it is one ownership property lying vacant.

2. Repayment of Principal amount of Loan up to Rs. 1.50 lakh is eligible for deduction under Sec 80C.

The planning in the entire issue has to be done in such a manner that all the joint holders are able to take the tax benefit and no part of the total repayment goes waste.

Advantage for joint home loan takers

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Tax benefit

Joint holders can claim the maximum tax benefits individually. This means each holder can get a tax rebate of Rs. 1.50 lakh for principal repayment under Sec 80C and Rs. 2 lakh for interest payment under Sec 24.

The tax benefits are applied according to the proportion of the loan taken by everyone involved in the joint loan. For e.g. if the ratio of ownership is 70%:30% then the loan amount of 50 L will be split as 35 L and 15 L respectively and interest/principal applicable to the respective amounts will be taken into account for each individual taking the loan. For claiming your tax, it is best to  procure  a home sharing agreement, detailing the ownership proportion in a stamp paper, as legal proof for ownership.

To get the best out of the tax savings, it is good to let the partner with the higher pay make a higher contribution towards the home loan resulting in a better tax benefit collectively. In the case of an earning couple, this would make most sense as other expenses can be manged with the income of the person making a lesser share towards the loan. This would help you optimize the benefits from the tax exemption on principal and interest repaid.

Increased Loan Amount Eligibility

If more than one person takes a home loan then income of all the co-owners will be considered by the lenders. This can help increase the size of the loan. In this case, the bank combines the incomes of both the applicants, and thus, can sanction a proportionately higher loan amount. Buying a house jointly facilitates a larger loan as income of all the co-owners would be considered by the lenders.

Additional benefits:

  • In many states, a lower property registration fee is levied in case the property is owned by women either individually or jointly.
  • If husband and wife jointly own a property reduces the succession issues.

So taking a joint home loan has the significant twin benefit of increasing your loan eligibility and maximizing your tax rebate. There is one rule banks insist on when you apply for a joint home loan, which is that all co-owners of the property should also be co-applicants but the reverse need not be true.

Under Construction house- Another aspect that needs to be remembered is if you are buying a house under construction that you can claim tax benefits only after the construction of the house is completed.

Joint structure- The term ‘joint benefit’ in a housing loan refers to a situation where more than one person takes and repays a home loan. Here, the co-applicants are family members, which include husband and wife or father and son or father and daughter or mother and son or mother and daughter as the case may be. In such a situation, tax benefits have to be divided between all co-applicants and hence known as joint benefits.

Joint account – The repayment of a joint loan has to be made from a joint account owned by the co-applicants. Each of them needs to contribute his/her share to the account. But there are times when this is not possible and in case the payment is being made from just one person’s account then there has to be a method whereby the other individual is contributing his/her share. This will ensure that the benefits are also available in an adequate manner and that there are conditions that are being fulfilled in the process.

Disadvantage of a home loan in joint names

If you buy another house in future then as per Income Tax Act if a person has more than one house in his name, one of them will be treated as self-occupied, and another will be treated as let-out – even if it is not actually let out on rent. You would need to pay income tax on the rent received if this second house is actually rented out. But if it is not rented out, it is deemed as rented out, and you would have to pay income tax on an amount that you would have received as rent as per prevailing market rates.

When one should take Home Loan in Joint names:-  Take the home loan in joint names

  • If You need a higher loan amount then your eligibility in Individual capacity
  • The income tax savings by opting for a joint loan is significantly higher than a single-name loan

When one should take Home Loan in Joint names  –

  • You have enough loan eligibility as single applicant
  • The income tax savings by opting for a joint loan is not significantly higher than a single-name loan
  • You plan to purchase another house in near future

Image courtesy of arztsamui at FreeDigitalPhotos.net

(Republished with Amendments)

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185 responses to “Tax & Loan Eligibility benefits from Home loan in Joint Names”

  1. Kundan says:

    The property is in joint name with my wife (50:50), my wife is co-borrower in loan also, but I am paying 100% EMI for this home loan since 2008. This property is rented, me and my wife are getting 50% of rent each month in our respective accounts. Can I Claim total 100% of Interest Rebate on this home loan after subtracting my part of 50% rent received ? Also, I show the Rental income received as income in my wife’s ITR although she is not contributing to the EMI. Please suggest.

  2. T Narsimlu says:

    An employee has availed housing loan with wife/daughter as co-applicant. Wife is not working, a house maker (self certified). He would like to avail full interest on housing loan for housing loan. Can this be allowed?

  3. Vijay Dubey says:

    I have one flat on my name(home loan finished). planning to purchase 2nd flat on my wife name as there is 1 rupees stamp duty and registration charge. my wife is house wife without income so plan to take home loan on my name then can I eligible 100% tax rebate.
    please suggest.

  4. Vikas Gupta says:

    How should an employer allow benefit of section 24(b) to its employee who presents provisional loan certificate in which share of property of co-owners is not mentioned. On behalf of an employer I’ve found many such cases. Pl suggest what to allow.

  5. Ankur Narula says:

    Dear Sirs,
    would like to know the benefit of tax deduction one can claim if he has two house loan for two different property. can he claim the deduction under sec 24 b for interest for two house loan.

  6. Hemanth says:

    Dear Sir, I am working as Software Engineer. my wife is not an employee just house wife. We are planning for registration and take home loan with SBI. I would be paying all EMI’s. Pls. guide on whose name to register the flat and if I can claim 100% Tax exemption.

  7. Dheerendra Gupta says:

    Me and my wife are co-borrower for our home loan and co-owner of our joint property.We started our EMI from 2011.We got the possession of the property in 2014.since then we are claiming 50%(each) of the interest paid before possession/5+interest paid after possession.it has been three years since we are claiming that.We have 2 more years to claim exemption of the interest paid before possession.
    Now,we have closed the loan(prepayment) and my wife is quitting her job
    My query is “Can I claim complete 100% of the interest paid before possession/5 if my wife gives a written declaration that she is not claiming anything since she is not working.Since we have closed our loan ,there is no interest paid in current financial year.I will be only claiming the interest paid before possession of the property?

  8. Tara Chand says:

    Dear Sir,
    I am in process of taking loan with my wife declared as the first applicants (as interest rate and registration fee is lower if first applicants is a female) and me as the co-applicant.
    However, only my salary has been considered while deciding loan eligibility and only would be paying the EMIs.
    So I just wanted to be sure that me not being the first applicants would not affect my tax relaxation?
    I.e. I could still show (even when I am the co-applicant)
    1). Rs.100000/- of housing loan maximum limit under section 80 c and
    2) Rs. 150000/- of interest of home loan under section 24.
    As my wife’s salary is not considered while deciding loan amount eligibility also only I am paying the EMIs so could I get the whole 100% of tax benefit in such case?
    Please help its really urgent towards making a decision.
    Thanks.
    Tara Chand Khichar

  9. prashant says:

    Me and my wife are co-borrower for our home loan and co-owner of our joint property.We started our EMI from 2011.We got the possession of the property in 2014.since then we are claiming 50%(each) of the interest paid before possession/5+interest paid after possession.it has been three years since we are claiming that.We have 2 more years to claim exemption of the interest paid before possession.
    Now,we have closed the loan(prepayment) and my wife is quitting her job
    My query is “Can I claim complete 100% of the interest paid before possession/5 if my wife gives a written declaration that she is not claiming anything since she is not working.Since we have closed our loan ,there is no interest paid in current financial year.I will be only claiming the interest paid before possession of the property?”

  10. Narasingh Padhi says:

    Dear Sir,
    I have taken a joint Housing building loan with my wife.She has no income but property is in her name only.Can I claim tax benefit as a co borrower?

    I have also another HBL in my own name and I am claiming tax benefit for the same.

  11. Murali says:

    If my wife have a home loan. She is paying _6000/_ Per month.Can I get tax benefit of my account.

  12. Sourabh says:

    I am willing to buy a flat which was booked by my father in law 2 years back. Since I don’t have the full quantum of money I am willing to finance some portion by housing loan. Kindly clarify the following
    1. Is it legal to apply for a housing loan
    2. Am I be applicable for 80C (interest n principal) tax rebate
    3. Will I be paying the service tax for the entire amount or for just the rest of the instalments left

  13. aroop mandal says:

    My wife and I have jointly taken a home loan. The flat that we have purchased is in our joint names. However, deduction of EMI is being made from my account. If my wife wishes to claim income tax deduction u/s 80C and 24, can she do so by paying me an amount and claiming that as her contribution towards repayment of the home loan?

  14. Narasimha Rao Av says:

    Hello,
    I have taken a home loan in FY 2014-15 as a co-applicant along with my father. Here the house property is in my father’s name alone (not a joint property). Since i am a co-applicant of the home loan, and i am the only one re-paying the whole loan amount, am i eligible for tax benefit? can some one please help me.

    I saw in a site in internet, the property should be in both of the loan applicant names. Then only both of them are eligible for tax benefit. In this case, am i not eligible for tax benefit??

  15. Dpratik Patel says:

    Hello, my home loan of 2012. That time I get tax benifit on 1.5 lac interest. If I transfer Home loan to other bank. Is it counted as new home loan? and now can I get tax benifite on 2 lac interest as a new home loan?

  16. Raju Chaurasia says:

    I have taken a loan as co-applicant with my wife, property is under my wife name, is i am eligible for tax exemption under 80c and 24B

  17. rajnish kumar says:

    i have same problem . wht to do now?

  18. rajnish kumar says:

    i have same problem.kindly tell me wht to do?

  19. Harjinder Singh says:

    Can it be possible in case of joint house loan that one owner gets rebate only on the full interest paid and another one gets rebate on the full principle paid.

  20. Manish Karsale says:

    Hi,
    Thank you for your informative posts above.
    I have purchased an under-construction Flat in Pune –
    expected to get possession in Dec 2016. I am the primary applicant and my
    mother is a co-applicant for the property and the Home Loan from AXIS Bank.
    I am currently paying the Pre-EMI interest for the flat as
    my mother is a homemaker.
    1. Hence based on the above posts, I will be able to avail
    the tax benefits only after the possession in 5 yearly equal portions. Right?
    2. My wife is working and has no loan in her name. Now, I
    wish to add my wife as a co-owner and a co-applicant for the flat so that we
    both can avail tax benefit on the EMI that we will pay after possession. How
    can I do that?
    What government formalities/deeds/contracts will need to be
    made? Can this be done before possession or after possession? Approximately
    what would be the cost for this transaction?
    3. I understand the 1.5L on Principle payment and 2L on the
    interest can be availed for tax benefit. Can me and my wife (after adding as
    co-owner and co-applicant) avail the tax benefit of 1.5L on Principal payment
    and 2L on the interest SEPARATELY. Cumulative 3 L on Principle and 4 L on
    Interest?

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