Claiming Tax Benefits on a Joint Home Loan- Business News
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Claiming Tax Benefits on a Joint Home Loan

Tax benefits on a house property can only be claimed starting the financial year in which construction of the property is complete; it is not available for an under construction property.

  • July 20, 2016  
  • |  
  • UPDATED   16:52 IST


Buying a house is usually one of your life's biggest financial move. It sometimes requires pooling in of funds with your spouse or another member of the family. As two people contribute to the EMI, it can allow you to choose a bigger or better house. Joint home loans also mean higher tax benefits for the household.

Before we discuss tax benefits of a joint home loan, it's important to understand conditions which must be met -

  • You must be a co-owner - To be able to claim tax benefits for a home loan, you must be an owner in the property. Many a times, a loan is taken jointly, but the borrower is not an owner as per the property documents. In such a case you may not be able to claim tax benefits.
  • You must be a co-borrower - Besides being an owner, you must also be an applicant as per the loan documents. Owners who are not borrowers and do not contribute to the EMI shall be devoid of the tax benefits.
  • The construction of the property must be complete - Tax benefits on a house property can only be claimed starting 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 instalments starting the year in which construction is complete.

Here are tax benefits available in case of a joint home loan-

Each joint owner and borrower can claim Rs 2lakhs interest deduction - In case of a joint home loan for a self-occupied house property, each of the owners can claim Rs 2lakhs in their tax return. The total interest is allocated between them based on their share of ownership. If no percentage share is specified, interest portion of the EMI is split equally and each of them can claim maximum up to Rs 2lakhs in their return. Let's understand by way of an example - Rohit and his wife bought a house via loan and paid Rs 4.5lakhs in interest in FY 2015-16. They live in this house and have 50:50 shares in the property. Rohit can claim Rs 2 lakhs in his tax return; his wife can also claim Rs 2 lakhs in her return. Do note that if the property is rented, there is no monetary limit on interest deduction, entire payout can be claimed. If this property is rented, Rohit can claim Rs 2.25lakhs in his return and his wife can claim the remaining Rs 2.25lakhs in her return.

Each joint owner can claim 80C deduction on principal repayment - Each of the co-owner; co-borrower can claim deduction towards principal component of the EMI under section 80C. Maximum deduction allowed under section 80C is Rs 1.5lakhs.

Each joint owner can split costs of registration and stamp duty and claim 80C deduction - Besides principal portion, payment made towards registration and stamp duty is also eligible for deduction under section 80C. Make sure these are claimed in the year in which they are paid. Owners can split these costs and claim so that maximum benefit is availed.

As a family you can claim a larger tax benefit for the interest paid on home loan when your property is jointly owned and your interest outgo is more than Rs 2lakhs per annum.

Column by Archit Gupta, Founder & CEO ClearTax.com