Preeti Khurana of Cleartax.in | Updated On: May 23, 2015 17:54 (IST) | NDTV Profit
Several new home buyers purchase their property jointly with spouse or with parents. Pooling of funds and getting a higher loan sanction limit are some of the advantages of joint purchase. Joint ownership of a house property also has some tax benefits, let’s understand them in detail.
Any deduction for interest on home loan can be availed by a person when they meet these conditions.
1. Firstly, one must be ‘owner’ of the property. For example, Vinay helped his retired father buy a property by contributing to his father’s pool of funds and then taking up a home loan to repay from his salary. Can Vinay claim interest deduction on the home loan? No, not unless he is an owner of property.
2. Secondly, one must be a ‘co-borrower’ in the home loan. Besides being a co-owner, one must also be a co-borrower to avail tax deductions. Take the case of Ritu and Arun who pooled in their savings to buy their first home. The property was bought in both their names, since adding Ritu’s name helped save on stamp duty. Arun who had a larger salary took up a loan for the money they were short of. Will Ritu be able to claim interest deduction? Ritu can claim deduction on interest only when she is a co-borrower in the home loan.
The joint owners, who are also co-borrowers of a self occupied house property can claim – deduction on interest on home loan up to Rs 2,00,000 each. And deduction on principal repayments, including deduction for stamp duty and registration charges under section 80C within the overall limit of Rs 1,50,000 each. These deductions are allowed to be claimed in the same ratio as that of the ownership share in the property.
As a family when you take up a joint home loan, your tax benefits will be larger where your interest outgo is more than Rs 2,00,000 or where availing a deduction moves one of the joint owners in a lower slab.
It’s pertinent to note that tax benefits on a house property are available when the construction of the property is complete. These tax benefits are not available for an under construction property.
If you have a joint owner, who is also a co-borrower but does not contribute to EMI payment; you may claim the entire interest as a deduction in your income tax return.
(Preeti Khurana is a chartered accountant and chief editor at http://www.cleartax.in)
Disclaimer: All information in this article has been provided by Cleartax.in and NDTV Profit is not responsible for the accuracy and completeness of the same.
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