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According to the Income Tax Act, 1961, you are eligible for a tax deduction on the interest part of your Home Loan under section 24. Also, you can leverage a tax deduction of up to Rs. 1.5 Lakh on principal repayments under section 80C.
Eligibility to avail tax benefits on a joint home loan
To avail tax benefits on a joint home loan, you should be a co-applicant of the loan and co-owner of the property. The property shall be on the name of both the applicants. Although, the tax benefits would be claimed individually as per the share of the ownership of the property.
Allowance of tax benefits under the Income Tax Act 1961
Under section 80C, you can claim a deduction of Rs. 1.5 Lakh at max, which is allowed on EMIs to repay the principal amount. And Under section 24, payments on interest amount are deductible up to Rs. 2 Lakh.
There is no cap on the maximum amount that is tax-deductible if you are going to rent out your house.
The co-applicants of the joint home loan can enjoy a hefty amount of tax benefits as compared to individual Home Loan.
The most important point to note is that each co-applicant can only avail tax benefits in proportion to their contribution to repay the home loan.
Finserv MARKETS recommends you to have individual proportions clear in some form of documentation by the way of Memorandum of Understanding (MoU).
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