Here is How To Claim Tax Benefits On Joint Home Loans
Convenient EMI payment and tax benefits are the two main reasons why people opt for home loans. But do you know that join home loans holds more significant tax benefits? Let’s see how you can claim them.
The concept of joint loans on your home may sound a little complex to you, but the advantages it provides are undeniable. The two primary perks of applying for a joint loan on your property are:
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Joint home loan offer a more significant amount to be drawn. As both partners’ financial statuses are analyzed, the amount of loan increases significantly.
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The EMIs don’t burden you much because your co-partner divides them equally.
Almost everyone knows about these advantages of joint loans on a property. But are you aware of the better tax benefits that you can avail of on these loans? Yes, you heard it right. You can get larger tax rebates or benefits on loans taken in joint names on a property. Here is how you can claim it.
#1 Purchase A Constructed Property
You can only avail of tax benefits on a joint loan if the purchased property is constructed. In case you buy an under-construction property, you will have to wait until the post-construction to claim tax benefits. The only way of getting a tax rebate of this duration is through paid interest. You can request a benefit on the interest of the loan that you paid during the construction period. It can be done in five equal installments. However, you get this perk only when the construction of the property is done. If you want instant benefits, you will have to buy a constructed home.
#2 Become A Co-Owner
To avail of tax benefits on jointly named loans, you need to be the property’s co-owner. Plus, it should be a self-occupied property. Otherwise, you can’t claim a tax rebate on both principal repayment and interest payment. If you have bought the home in a joint name, then you get these two tax benefits:
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Principal Repayment: By repaying the principal amount of your share, you avail of its benefits up to ₹1.5 lakh. Similarly, the other co-owner of the property can claim up to ₹1.5 lakh on their principal repayment share. If the ownership ratio isn’t specified, you both are eligible for a 50-50 benefit and payment.
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Interest Payment: The amount of interest you pay in the entire year is eligible for up to ₹2 lakh of tax rebate. When you get a loan in the joint name, each owner can claim tax benefits on their share of the paid interest. The amount will also depend on the type of home loan rates.
Remember, you can’t claim any tax benefits on the entire amount of the repaid principal and paid interest.
#3 Become A Co-Borrower
Being co-owners isn’t enough to claim the tax benefits on loan on your property. You need to be co-borrowers as well. It isn’t necessary that both the owners of the house apply for the loan. That is why you only get eligible for the larger tax benefits when the co-owners also apply for the loan as co-borrowers. You get the individual tax rebate, only when both of you are officially replaying the EMIs.
Now that you know how to claim a more significant tax rebate on joint loans taken on the property don’t make the mistake of taking all the burden on your head. Divide the loan and get more benefits.
I hope this article will help you all things that you want to know and also share with his friends.