by Arti Chaudhary
If you are planning to buy a new property then why not go for the co-ownership, especially when you can avail amazing tax benefits in joint home loans. You can acquire this loan along with your parents, own siblings, spouse, or with an acquaintance (in this case person should be trustworthy and a clear agreement should be signed). Another term related to joint home loan is co-borrower, here the person is liable to pay the loan amount.
Some basic benefits of joint property ownership are:
When both the owners of the property are working, their income gets clubbed and you became eligible to take a higher amount of loan. Your Cibil score or credit score decides the amount bank will grant you as a loan. If in case, the credit score of any of the owner is poor, and another one is having a better score, then also the bank will give you a higher amount of loan.
After knowing the benefits of joint property ownership let us focus on some hidden tax benefits of the joint home loans:
Under the joint home loan, you can claim three different tax deductions:
Section 80C (Principal repayment)
If you are a single owner of the property then you can claim the amount of 2 lakhs as an Interest benefit, whereas, for home loan repayment, both the owners individually can claim tax benefits of 1.5 lakhs, every year.
Section 24 (Interest repayment)
Again in section 24 both the owners can claim the amount of repayment individually and this time the amount is of 2 lakhs each by showing a loss from the property.
If you have taken a property under affordable housing and the loan amount is less than 45 lakhs in which you can claim an additional tax deduction of 1.5 lakhs individually.
It means that both the owners can claim up to 5 lakhs of tax benefits individually, which includes, 3.5 lakhs of interest repayment, 1.5 lakhs of principle repayment and 1.5 lakhs of addition tax repayment under section 80C, section 24, and section 80EEA respectively.
However, there are few things to be kept in mind before taking a joint home loan and even after the sanction of the loan.
Depending upon your shares in the property, the tax will apply to both the owners individually. This means you can’t be taxed as a Body of Individual or Association of persons if your shares in the property are certain or ascertainable. Moreover, in case you are not servicing the home loan even though you are the co-borrower, you can’t claim any of the tax benefits on the home loan.
Tax benefits are not available for an under-construction property. So, to avail the benefits, the construction of your property should be completed in the financial year. Also, both of the owners can avail the tax benefits only if the shares in the property is shared equally which means in the ratio of 50:50. That equal tax benefit requires equal shares in the property.
Once you meet all the guidelines of the joint home loan you are free to enjoy the tax benefits with your respective property partner. So why wait! Go on and buy your own dream home now.