Know the Ideal Ways to Save Tax on Joint Home Loan

Know the Ideal Ways to Save Tax on Joint Home Loan

The Income Tax Act offers several tax rebates that can be availed by the homebuyers. However, some buyers take up a joint home loan to realize the dream of owning a home. Such prospects can enjoy tax rebates under Section 80 EEA and Section 24 of the Income Tax Act. However, they must meet the required criteria.

Eligibility Criteria to Save Tax on Joint Home Loan:

  • Both should be the Co-Owner – Tax benefits on a joint home loan can only be availed if both the persons share ownership right in the property. In some cases, the home loan is availed jointly but the co-borrower does not hold ownership in the immovable asset. In this scenario, the joint home loan borrowers cannot avail the home loan tax benefit.
  • You Must be a Co-Borrower – Apart from being the owner of the property, the person must be named as a co-borrower in the joint home loan documents. The owner is deferred from availing interest on housing loan deductions for the financial year.
  • Property Should be Ready-to-Move In – The home loan tax benefit can only be availed on the ready to move in residential property. The deductions listed under Section 24 of the income tax act are applicable only for the year in which the construction is completed.
  • However, in the case of the under-construction property, the joint home loan borrower can avail the expense on construction in five easy instalments for the year in which the construction is completed.

Tax Benefits that can be availed on Joint Home Loan:

  • In case of self-occupancy, every co-owner who is also listed as a co-borrower in the joint home loan is eligible for the tax rebate of Rs 2,00,000 for interest on the home loan in their Income Tax Return. The total interest paid on the loan amount is distributed amongst the owners according to their ownership percentage.
  • Each home loan borrower can enjoy a maximum rebate of Rs. 2,00,000 and the property owners cannot avail of interest more than the total interest paid on the home loan.
  • In case of a rented property, the interest availed as the deduction for a rented property is limited to the amount to which loss from such immovable asset is not more than Rs. 2 lacs.
  • Every co-owner can avail of a standard deduction of upto Rs. 1.50 lacs against the repayment of principal amount under section 80C. 

Consider the above-mentioned tax relaxation and save maximum income tax while filing the IT return. Remember to keep all the documents updated to prove the ownership right in the property along with the proof of EMIs paid till date.

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