How to claim tax benefits on joint home loans
December 4, 2019|Posted in: home
Planning to buy a luxury flat in Kerala? You can do it by pooling in funds with your spouse or any other family member to reduce your financial burden. When there are two people to contribute to the EMI of the home loan, you can go for buying a bigger house. Joint home loans also mean higher tax benefits for you! Check out how to claim tax benefits on joint home loans…
But certain conditions have to be met to get these benefits:
Be a co-owner – You must be an owner in the property to be able to claim tax benefits for a home loan. If the borrower is not an owner as per the document of the luxury flat in Kerala then in a loan taken jointly, you may not be able to claim tax benefits.
Be a co-borrower – Apart from being an owner, in the loan documents you must also be an applicant. Owners who are not borrowers of the home loan and do not contribute to the EMI could not get tax benefits.
The construction of the flat for sale in Kerala must be complete – You cannot claim Tax benefits for an under-construction property. Only in the financial year when construction of the property is complete, you can start claiming any Tax benefits on a house property. Nevertheless, any expenses prior to completion are claimed in five equal instalments starting the year in which construction is complete.
The tax benefits you can claim in case of a joint home loan are:
A sum of Rs 2 lakhs interest deduction can be availed by each joint owner and borrower. For a self-occupied luxury flat in Kerala, each of the owners can claim Rs 2 lakhs in their tax return.The division of total interest is done between them based on their share of ownership. If no percentage share is specified, the interest portion of the EMI is split equally.
- If the property is rented, there is no monetary limit on interest deduction & entire payout can be claimed.
- Each joint owner has the right to claim a deduction on principal repayment under section 80C – The maximum deduction allowed under section 80C is Rs 1.5 lakhs.
- The costs of registration and stamp duty for flats for sale in Kerala can be split and paid by each joint owner to claim 80C deduction. Ensure these are claimed in the same year in which they are paid.
- A larger tax benefit can be claimed for the interest paid on home loan as a family if the luxury flat in Kerala is jointly owned and your interest comes to more than Rs 2 lakhs per annum.