Joint Home Loan Tax Benefits: Finance Trading Times

Joint Home Loan Tax Benefits

Continuing our series on home loan articles, in this article we discuss the case of Tax Benefits on Joint Home Loans. You can have a look at the other Home loan Tax Benefits Scenarios at All Home Loan Articles where we discuss various scenarios on eligibility for home loan tax benefits.

Scenario 5: Home Loan Taken, Possession received but given the house on rent: Joint Home Loan
You are eligible for home loan tax benefit for both your principle repayment and interest repayment.
You can also be eligble for getting HRA tax benefit. Check the link for details : HRA & Home Loan Tax Benefit can be Claimed Together

If you have any questions/queries regarding home loans or HRA claims, the FT Times team will be happy to address them. Please post your questions in the comments section by clicking on the link "Post a Comment" at the end of this page

Joint Home Loan Tax Benefits

Scenario 6: Joint Home Loan
The case of Joint home loan with your partner or other family member is the most beneficial one. Why? Because both (or all) the joint home loan applicants can claim for tax benefit on both the interest payment under section 24(b) and principal repayment under section 80C.
Assume the following case where you and your partner went for a joint home loan (with 50:50 share), and over a financial year you both individually repayed 80,000 each for principle repayment and 180,000 each for interest repayment.

So together you both paid 160,000 as principle repayment and 3.6 lakhs as interest repayment.
Had it been a single person home loan, he would have claimed only a max of 1 Lakh for principle repayment and 1.5 Lakhs for interest repayment. But in this case being a joint home loan account between two people, both can claim for 80,000 as principle repayment and 1.5 lakh each as interest repayment. Hence, jointly you both can double your tax benefit in case of a joint loan.

However, you must be a bit careful with the joint applications.
The reasons are that joint loan applications are scrutinized deeply by the home loan offering bank and are liable to get rejected on many basis. For e.g., a sister-brother jointly applied for home loan but that might get rejected because the home loan bank might raise objections citing problems in future leading to "rights on property" between the sister and brother. Similar case can occur between 2 brothers, cousins, etc.
The best combination for a joint home loan is husband and wife, as they are supposed to live together and usually the chances of disputes are less.

However, please remember that even if you take a joint home loan with your spouse, it locks both of you till you repay the entire loan.
Take this case. A couple - husband IT engineer and wife doctor - applies for joint home loan. Since doctor wife was not working because she has a 1.5 years old kid to look after at the time of loan application, they decide to go with 90:10 share ratio.
The thought was that after 2 years or so, when the kid will start going to school, the doctor wife can start her clinic and then she can claim for the tax benefit on her share of 10%.
But after 2 years, the wife tried getting a business loan to setup her clinic and she was denied. The reason, she already has a joint loan running in her name. She cannot get another one till this one gets cleared.

Although this might vary from bank to bank, but it is a thought which needs to be kept in mind before going for Joint Home Loan applications
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2 Comments: Post your Comments

Chandu said...(on 24 January 2012 at 19:41 )  

I have taken home loan with co-partner as my Father and Brother as Porperty is there in Name of all three ( Myself, Father, Brother), even bank was also not ready give loan only in my name. My Brother is agricultrist and he does not have regular income, hence I am Paying full loan preimum to bank. Can I use my for tax benifit the 100% of intrest paid and principal amount paid. Please suggest/ guide.

Chandu said...(on 24 January 2012 at 19:43 )  

Home loan with co-partner get tax benifits

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