How Joint Home Loan tax benefits can maximise your savings: A complete breakdown

Joint Home Loans are always beneficial as your Loan amount increases and your burden is shared with the co-owner. The best part is that both the owners can claim tax benefits. Property ownership is a prerequisite to availing any tax benefits against it. You may have applied for the Loan jointly, but you may not be entitled to the tax benefits unless you are the property’s owner/co-owner.

A Joint Home Loan offers distinct advantages for individuals seeking to purchase property together. Beyond sharing financial responsibilities, it presents significant tax benefits for both co-applicants. Here are things you need to know about Joint Home Loan tax benefits:

• In a Joint Home Loan, tax benefits are shared among co-applicants, allowing multiple individuals to benefit from tax advantages, especially if the yearly Loan payment bill can be split. This streamlined approach combines the tax benefits into a Home Loan.
• Each co-owner’s share in the Loan ownership ratio determines the division of tax exemption. Each applicant retains the right to claim a maximum tax rebate of Rs. 1.5 lakh (previously Rs. 1 lakh until AY 2016-17) and up to Rs. 2 lakh for principal repayment through the Home Loan individually.
• An essential criterion for this Home Loan and its associated tax exemption is that two people must take the Loan jointly. Additionally, clear documentation specifying each co-owner’s ownership percentage is crucial for availing tax benefits.
• If the Loan was taken for the construction of a new house from a recognised lender, then the amount paid towards the principal by co-owners up to Rs. 1.5 lakh can also be availed under Section 80C. However, it includes other components such as contributions to the Provident Fund, ULIPS, etc. You should know how to claim tax benefits on Joint Home Loans if you have applied for them.
• The entire Home Loan interest is tax-deductible if the property is rented out. Up to Rs. 1.5 lakh is exempted upon repayment of the principal Loan amount.
• Joint Home Loan tax benefits are enjoyed by co-owners and co-applicants even when it concerns tax. Under section 24(b), the maximum tax benefits on Home Loans for joint owners are up to Rs. 2 lakh on the amount paid towards the interest as per their ITR statements. The amount paid towards interest will be proportionate to the percentage ownership of each co-applicant.

Additionally, until March 31, 2022, co-owners can claim an additional Joint Home Loan tax exemption of up to Rs. 1.5 lakh towards the interest paid under section 80EEA (subject to certain terms and conditions). This benefit will no longer be available from April 1, 2022.

Conclusion

Joint Home Loans provide numerous tax advantages by leveraging combined incomes for increased Loan eligibility and shared repayment responsibilities. By strategically utilising a Joint Home Loan, individuals can significantly reduce their tax burden while sharing the responsibilities of homeownership.