joint home loan
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Your dream home brings along with it hopes, aspirations, loans and EMIs. Many people in the excitement of buying a home pay very little attention to details of loans. When an individual’s income is not enough to make him/her eligible for a home loan, banks offer the facility of having a co-borrower/co-owner who can be a parent, friend or a spouse.

Then the bank assesses the capability of both the individuals in a joint capacity and decides the future course of action. This process is made far simpler and efficient when the other person is from the family. There are tax benefits involved with immediate relatives in a joint home loan. It not only allows a person to share the burden but also take out the maximum from the Income Tax Act.

Understand the difference between a co-owner, co-applicant and co-borrower when applying for a joint home loan. Being a co-owner means that the other person has a legal right just like the main borrower on the property and can avail tax benefits.

Being a co-applicant of a joint home loan means that the other person has applied for a home loan with the main borrower but being a co-borrower means that there is shared responsibility of repaying the home loan which makes them eligible for tax benefits. In case the co-borrower doesn’t pay EMIs, there are no tax benefits to be availed on the loan.

Know your EMIs and how you can save tax on repayment of EMIs

There are two kinds of EMIs. Principal EMI and Interest EMI. Income Tax Act’s Section 80C allows those seeking joint home loan a tax deduction up to Rs.1.5 lakh a year to an individual on payment of principal EMI. It means that each of the person in the joint home loan is offered a certain tax deduction which adds up to doubled benefit.

Payments related to stamp duty and registration are also eligible for tax benefit under Section 80C. It should also be remembered that the claims should be made in the same year as the year of repayment.

When you as a co-owner and co-applicant pay Interest EMI in a joint home loan, you can get a tax deduction up to Rs 2 lakh under Section 24 of the Income Tax Act. Your sibling or spouse can get another up to 2 lakh benefit based on proportion of ownership.

A tax deduction up to Rs 50, 000 is given on interest EMI payments when a homebuyer buys a home for the first time. Under Section 80EE of the Income Tax Act, such deduction is given apart from the above deduction of Rs 2 lakh provided under Section 24. Saving tax becomes much more easy when combined with the incomes of your spouse, friends or siblings.

These tax benefits can be claimed at the start of the new financial year only when the construction of the home is complete. There are no tax benefits for semi-constructed or under construction homes.