Buying a house with your spouse? Here’s how it can reduce your tax bill

Home ownership tax benefits: Joint home ownership is increasingly becoming a preferred financial strategy among married couples, especially dual-income households looking to maximise tax savings while improving home loan eligibility. Real estate and tax experts say that when structured properly, co-owning a property can help couples claim larger deductions, improve financial planning, and distribute long-term liabilities more efficiently.

Joint ownership, also known as co-ownership, refers to a legal arrangement where two or more individuals jointly own a property. In most cases, co-owners can include spouses, family members, business partners, or friends, with each person holding rights over the property.

Apart from simplifying inheritance and sharing financial responsibility, joint ownership also offers several tax-related advantages for couples taking a home loan together.

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How tax benefits work in joint ownership

Under existing income tax provisions, both co-owners can separately claim deductions on home loan principal repayment under Section 80C and on home loan interest under Section 24(b), provided both are co-borrowers and contribute toward loan repayment.

Currently, individuals can claim up to Rs 1.5 lakh deduction on principal repayment under Section 80C and up to Rs 2 lakh deduction on interest payments for self-occupied property under Section 24(b).

This means a working couple jointly servicing a home loan may effectively double the available deductions compared to a single owner.

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“The two partners who share ownership of the property and take out a mortgage together will receive tax deductions that increase their overall tax benefits through Section 80C and Section 24(b) home loan principal and interest deductions,” said Anurag Goel, Director at Goel Ganga Developments.

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Experts note that the deductions are generally available in proportion to ownership share and actual contribution toward EMI payments. This makes documentation and payment tracking important.

Couples are often advised to pay EMIs through a joint bank account or maintain clearly traceable individual contributions to avoid future tax disputes.

Higher loan eligibility for couples

Joint ownership can also improve borrowing capacity because lenders consider the combined income of both applicants while evaluating loan eligibility.

This may help couples qualify for larger loan amounts, better repayment terms, or improved interest rates.

Experts say this becomes particularly useful in major urban markets where rising property prices make single-income borrowing difficult.

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“The system provides two benefits because couples can achieve higher loan amounts through their combined income which results in better loan terms for them,” Goel added.

For many couples, joint ownership also distributes long-term financial responsibility, including EMIs, maintenance costs, property taxes, and repairs.

Strategic tax planning matters

Real estate experts say joint ownership works best when integrated into broader financial planning instead of being viewed only as a tax-saving tool.

“Joint ownership in marriage goes beyond asset sharing because it offers couples a way to achieve better tax outcomes through proper strategic planning,” said Shashank Gupta, Director at RPS Group.

According to experts, ownership shares can sometimes be structured based on income levels so that higher-income partners maximise tax efficiency more effectively.

They also note that during the initial years of a home loan — when interest payments are highest — both co-borrowers may benefit significantly from separate deductions.

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However, experts caution that clarity regarding ownership percentage, loan contribution, and repayment structure is essential from the beginning.

Risks involved in joint ownership

Despite the benefits, joint ownership also carries certain risks.

Disagreements over property usage, renovation decisions, maintenance expenses, rental arrangements, or eventual sale of the property can create conflicts between co-owners. Since key decisions often require mutual consent, disagreements may delay important financial or legal decisions.

Financial liability is another major consideration. If one co-owner fails to contribute toward loan repayment or property expenses, the burden may shift to the other owner.

Experts say couples should also consider future scenarios involving resale, inheritance, rental income taxation, or separation before entering into joint ownership arrangements.

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