Only if you are joint owners of a home, tax benefits for joint home loans can be enjoyed. This not meant for all homeowners. It is quite essential and to be noted that the ownership in the property is a prerequisite to availing any tax benefits against the property. Home loans are perhaps the yardsticks for most of the home owners.
The Tax exemption for home loan is one of the prime benefits that a homeowner enjoys and it is quite an effective one. There are certain steps that need to be followed for calculating income from house property and that is how tax exemption comes out. The major benefit of a joint house loan is that it maximize the borrowing capacity of the home buyers. This allows you to share the debt burden and also extract maximum benefits offered by the Income Tax Act.
Considerations for a Joint Home Loan:
A joint home loan should be handled carefully for it has loopholes too. People also have to qualify certain eligibility tests for acquiring joint home loans. There is a separate section which is called home loan in blood relation. Here, the joint ownership has to belong to people having blood relation.
All co-owners of the property must mandatorily join as the co-applicants, but all co-applicants may not necessarily be co-owners. This is a major part of the joint home loans and people tend to confuse this matter. While giving bank loans, banks verify whether you have blood relation.
The most important condition for this sort of home loan and the tax exemption is that, obviously the home loan has to be taken in the name of two individuals. First and foremost, you won’t get the loan, if there is only one applicant; hence, tax benefit on joint home loan is a far-fetched term.
How can you Claim Tax Benefits on your Loans?
For claiming tax benefit in this regard, you should be a co-borrower of the loan and also a joint owner of the property. This need to be fulfilled or else getting joint home loans becomes very difficult or rather next to impossible. You cannot claim the tax benefits on the home loan, if this doesn’t get satisfied. Home loan co applicant brother can also enjoy this facility.
If it happens that you are a joint owner as well as a co-borrower, yet you are not servicing the home loan. Tax exemption for home loan becomes difficult, thus, home loan repayment has to be done. Each of the co-borrowers can claim tax benefits up to Rs. 1.50 lakhs every year as per section 80C together.
On the assumption if home loan is taken for buying the property, the borrower’s ratio in the home loan, can be inferred from the share in the property and payments made. This is yet another effective process. In case of home loan in blood relation this helps to the greatest extent.
The interest that is paid against the home loan has the eligibility for a tax deduction for up to Rs. 2 lakhs for every year of the repayment term, from income of the individual. This provision is available through Section 24 of the Income Tax regulations applied for instance where the property is self-occupied or has a singular ownership with property being vacant.
This is to be remembered that you will be able to take a larger tax benefit against the interest paid on the home loan as a family; also your interest is more than Rs. 2 lakh per annum.
Most importantly, tax benefits on a housing property can only be claimed at the start of the financial year only when the property construction gets completed.
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