Tax Benefits on a Joint home loan can be availed by the joint home loan owners but certain conditions have to be met. To avail tax benefits against a property, it is important that one has ownership of the property, of course.
For example, it has been seen that if a property belongs to the parent, and the parent and the child apply for the loan, with the loan being paid of predominantly by the child, he or she does not get any tax benefits, because he was just a joint applicant in the loan and does not have ownership of the house. In case of joint ownership, and to avail Home Loan Co-applicant Tax Benefits, hence, a few criteria have to met.
- It is not just enough to be a co- applicant in the home loan. It is also essential that you have complete or part ownership of the property to avail the tax benefits. You must also be able to show the proper documents in that regard.
- One must also be a co- borrower of the loan, and your name must also be present in the loan documents as a co- borrower. Owners who are not borrowers and have not paid any EMIs, would automatically be devoid of getting any kind of tax benefits.
- The property must be fully constructed to avail ax benefits on it. The tax benefits can only be claimed starting the financial year when the property construction has been complete. For an under construction property, there are no tax benefits. However, there is one provision that any expense prior to completion is claimed in five equal installments, which starts the year when the property was completed.
Apart from the above mentioned factors, some other aspects, here are the actual benefits that can be enjoyed by joint home owners.
In case of self occupied property- each co- owner who has also applied for the loan and pays the EMI, can claim a maximum deduction of Rs 2 lakhs for the interest on home loan, in the IT returns. The total interest on the loan is allocated to the owners in the ratio of the ownership. Te total interest claimed by the owners’ borrowers cannot exceed the total interest paid for the loan.
In case of rented property- It was stated in the budget of 2017 that the interest that can be claimed as a deduction in case of rented property is restricted to the amount to which loss from such property does not exceed Rs 2 lakhs.
Each co- owner, and the co – applicants of the loan, can claim a deduction of maximum of Rs 1. 5 lakhs towards repayment of the principal amount under Section 80C of the IT Act.
Hence, as a family one will be able to make a larger tax benefit against the interest paid on the home loan when the property is jointly owned and the interest that is being paid on it exceeds Rs 2 lakhs. A Home Loan tax benefit for co applicant should retain the ownership papers as well to avail these deductions.
Banks and NBFCs like Bajaj Finserv are great options to apply for loans and there are a number of other benefits to be availed as well. If you need instant financing, contact NBFC today with an online loan application and you can also stand a chance to win a host of pre-approved offers on personal loans, home loan, business loans and a host of other financial products. All you have to do is share a few basic details and check out your pre-approved offer.
Also, there might be cases, when despite being a co- borrower, the co- applicant might not be paying any of the EMIs and only one person is actually paying off the loan. In that case, as a home loan tax benefit for co-borrower, one can claim the entire interest as a deduction in the IT return. The joint owners can also claim the stamp duty and registration charges of the property.
