Joint Home Loan: A wise decision for a double income couple
By Joseph Samson
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Ownership of the house makes one eligible for the tax benefits that can be claimed by an individual but in case you are just a co-borrower and not the co-owner in a joint loan then tax rebates cannot be availed by you. Conversely if the co-borrowers are co-owners of the property then the tax rebate will be available in the proportion of their share in the loan. Hence repayment capacity of each co-borrower should be considered before deciding on the share of a loan. If the co-owners are equal owner of a property but if the share of a loan is 2:1 then the tax benefits will also be availed in the same ratio.

Tax Benefits

Home loan tax benefits that fall under Section 80 C and Section 24 of Income Tax Act makes each borrower eligible for a maximum deduction of Rs 1,00,000 and Rs 1,50,000 associated to principal repayment and interest payable on home loan respectively. This deduction would take the total deduction to Rs 2,00,000 on principal repayment and Rs 3,00,000 on interest payment.

For instance a couple takes a home loan with equal share in the loan. If they pay Rs 2,50,000 as the interest and Rs 1,00,000 as principal, each can thereby claim Rs 1,25,000 and Rs 50,000 as interest and principal deduction respectively. The tax benefits are although accrued in co-ownership share but it is advisable to share the ownership in the ratio by which maximum benefits of tax exemptions can be availed by both the persons. If both the partners come under the same tax bracket then maximum benefits would be availed by sharing the home loan in equal ratio but if one is bracketed under the lower slab then the gains can be maximized by sharing the home loan in the ratio where the person with higher income takes greater amount of loan so that they can optimize their total tax benefits on the principal amount and interest payable on home loan.

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