The Secret to Lower Taxes and Lighter Home Loan Burden: Joint Home Loans

Posted in Housing Articles By Sajhyadri Chattopadhyay-
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The lifelong dream of buying your own home is often countered by the rising costs of real estate that can stop this dream from becoming a reality. Sure, many of us opt for a home loan to help in this endeavour. However, did you know that embarking on this journey with a partner, or a family member in the form of a joint home loan comes with several tax deductions and other advantages.  

Tax Benefits on a Joint Home Loan

1. Section 80C

Under Section 80C of the Income Tax Act, you can avail a deduction of up to ₹1.5 Lakhs. With a joint home loan, each co-borrower can claim separate deductions up to this amount, effectively doubling the cumulative tax benefit. However, your property must be fully developed and self-occupied to qualify for this benefit. 

2. Section 24(b)

Section 24(b) of the Income Tax Act permits a deduction of up to ₹2 Lakhs on the interest paid for the home loan of a self-occupied property. In a joint home loan, each co-borrower can individually claim this deduction. However, this applies to the interest component of the EMI only and not to the principal. 

Furthermore, the co-borrowers must self-occupy the property to qualify for this deduction and the property must be constructed within five years of the loan's initiation. 

3. Section 80EE

Section 80EE provides an extra deduction of up to ₹50,000 on the interest paid for a home loan, to first-time home buyers only. This is in addition to the ₹2 Lakhs deduction u/s 24(b), provided that the loan amount does not exceed ₹35 Lakhs, and the property's value is at least ₹50 Lakhs.  

If both co-borrowers of a joint home loan are first-time buyers of a property and loan within these limits, they can each claim this deduction. 

Know More: Documents Required for a Joint Home Loan

Understanding with an Example

Suppose you and your spouse have bought a house using a joint home loan of ₹35 Lakhs on a property worth ₹50 Lakhs. You both have an equal share in this property and have cumulatively paid ₹5 Lakhs as interest on your home loan. 

Each of you can claim a tax benefit of ₹2 Lakhs on the interest paid on the home loan as per Section 24(b). Collectively, you both claim a total interest deduction of ₹4 Lakhs from the interest payment. 

Moreover, you and your spouse are eligible to claim a deduction of ₹1.5 Lakhs each towards the repayment of the principal amount u/s 80C, resulting in a total deduction of ₹3 Lakhs.  

If you both are buying a house for the first time, you can collectively claim an additional ₹1 Lakh (₹50,000 each) on the interest paid, u/s 80EE. Thus, choosing a joint home loan effectively maximises your tax savings while enjoying the benefits of owning a home together. 

Quick Link: Apply for a Joint Home Loan

Eligibility Conditions for Claiming Tax Benefits on Your Property

To claim tax benefits onrelated to a joint home loan, you must meet the following criteria – 

1. Co-ownership of Property

You must be a co-owner of the property. If a loan is jointly taken but the borrower's name isn't included as an owner in the property documents, the tax benefits may not be applicable.  

2. Co-borrower Status for Loan

You must also be a co-applicant as per the home loan documents. Those who are co-owners but not borrowers who don't contribute to the loan’s EMI payments won't be eligible for these tax benefits. 

3. Completion of Property Construction

You can claim tax benefits for a property only after its construction is fully completed. Under-construction properties don’t qualify for these benefits. However, you can claim benefits for expenses incurred before completion in five equal instalments, from the year in which construction finishes.  

Know More: Benefits of a Joint Home Loan

Other Benefits of Taking a Joint Home Loan

Let's explore other advantages that you benefit from when you opt for a joint home loan – 

1. Enhanced Loan Eligibility

With a joint home loan, the lender takes both applicants' income into account. By combining your incomes, your loan eligibility increases, opening the door to a higher loan amount. This budget boost allows you and your family to better realise your realty aspirations.  

2. Lower Interest Rates for Women Co-owners

In India, many lenders extend a helping hand to women homebuyers by offering them special reduced interest rates on home loans. The person must be an owner or joint owner of the property as well as an applicant or joint applicant for the loan. 

3. Shared Repayment Responsibility

When you choose a joint home loan, you share the loan repayment responsibility. For example, you can opt to make EMI payments separately or through a joint bank account. This flexibility makes the responsibility of loan repayment a more manageable endeavour.  

4. Reduced Stamp Duty Charges for Women

The Indian Government has lowered the stamp duty rates for women to promote higher homeownership amongstby women. Across many states, stamp duty rates for women are usually 2% lower than those for men. These measures collectively support women's empowerment and make homeownership more accessible. 

 

Even beyond tax deductions and other benefits, buying a house jointly with your significant other is a grand commitment of your eternal love. Bajaj Markets is always ready to assist you achieve this dream with attractive offers and benefits on home loans. Enjoy a high loan amount, moderate interest rates, a secure and digitised application process, minimal documentation and more. Save tax and step towards fulfilling your homeownership goals today! 

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