Tax Benefits on Home Loan for Joint Owners

Tax incentives should be accessed by all the mutual owners of a joint home loan. Provided that such conditions are fulfilled. Let’s take a peek. Tax incentives are applicable to all the joint owners of a joint home loan.

It is appropriate to remember that ‘ownership’ of the land is a requirement for the use of any tax advantages against the house. You may have collectively taken the loan, but you may not be entitled to the tax incentives unless you are a landowner.

There have been cases where a parent purchases the property and the parent & child jointly take up a debt that is only paid off by the child. In such a scenario, the child, who isn’t really a co-owner, is devoid of the home loan tax benefit.

The borrower must be a co-owner

You must be an owner of the property in order to be eligible to receive tax incentives on a mortgage loan. On many occasions, a loan is taken jointly, but as per the property papers, the creditor is not an investor. You will not be entitled to assert tax incentives in such a situation.

In addition to being an owner, you must also be an applicant according to the loan papers, and you must be a joint home loan borrower. Proprietors who are not borrowers who do not apply to the EMI would be stripped of tax advantages. You can consult with the experts at PNB Housing to get a proper idea of the benefits.

Tax incentives on a house property may only be asserted, beginning with the financial year in which the property development is complete.

Property construction must be complete

Tax advantages for a property under renovation are not valid. Any costs before completion, however, are claimed in five equivalent installments beginning in the year in which work is finished.

When these requirements are fulfilled, it is possible to claim the following tax advantages-

For a self-occupied house, in their Income Tax Return, per co-owner who is also a co-applicant in the loan may demand a maximum deduction of Rs 2,00,000 for interest on the home loan. In proportion to their ownership, the gross interest paid on the debt is assigned to the owners. Each owner/borrower can claim a maximum interest gain of up to Rs 2,00,000.

The net interest claimed by the owners/borrowers cannot surpass the total interest charged for the loan. Let’s understand that Rahul and his father bought a house on loan and paid an interest of Rs 4,50,000. They have a stake of 50:50 in the property. In his tax return, Rahul can claim Rs 2,00,000, while his father can also claim Rs 2,00,000.

For a rental property, the interest that can be reported as a deduction in the case of rented property in the 2017 budget is reduced to the value of which the loss from such house property does not surpass Rs 2 lakhs. 

A deduction of a limit of Rs 1,50,000 for repayment of principal under section 80C can be asserted by each co-owner. This is under the maximum limit of Section 80C of Rs 1,50,000. As a family, then, since the house is jointly owned and the interest outgoing is more than Rs 2,00,000 per annum, you will be able to take a greater tax advantage on the interest paid on the home loan.