How to claim tax benefits on joint home loans

Tax Saving options under Section 80C

The income tax laws allow you some tax benefits with respect to home loans. The benefits under Section 24(b) for interest on capital borrowed for a tax deduction upto Rs.2 lakh for every year. Under Section 80C for the principal repayment, Tax exemption is up to Rs.1.50 lakh. Couples usually go for a joint home loan, as this can increase their home loan eligibility. However, there is confusion about who can claim the home loan benefit and how much tax benefits one can claim.

Therefore to claim the tax benefits on the property –

You must be a co-owner in the property 

One must be an owner in the property, to able to claim tax benefits for a home loan. Several times one is the owner of the property, however, borrowers are not always the owner as per the property documents. In the above case, you may not be able to claim tax benefits.

You must be a co-borrower for the loan

Besides being an owner, you must also be an applicant as per the loan documents. Owners who are not borrowers and have no obligation to pay EMI then are not considered in the tax benefits.

The construction of the property must be complete 

Tax benefits on a house property can only be claimed at the start of the financial year in which construction of the property is complete. Tax benefits are not available for an under construction property. However, any expenses prior to completion are claimed in five equal installments starting the year in which construction is complete.

How to determine one borrowers share?

At the time the property is purchased the share in the property is fixed. It may be your share in the home loan and the contribution towards the down payment. It may happen that you may be a joint owner of the property, as well as co-borrower in the home loan. But even when you may have fully paid for your share in the property by way of the down payment. It may also happen that your share in the property is not mentioned in the agreement of the house. Also, your share in the home loan is also not mentioned in the loan sanction letter issued by the lender. The share is equal in the house property unless there are other circumstances.



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