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While purchasing property, you can opt for a joint loan with your spouse. Under the Income Tax Act, tax benefits are available on home loans and the interest paid on them. In case of joint loans also, all the co-borrowers can get tax benefits. The maximum limit of Rs.1, 50,000 will apply individually to both of you (i.e. the total deduction will be limited to Rs.3, 00,000). It needs to be ensured that both should be co-owners of the property. A co-owner of a house must be a co-borrower as well. It is essential for a co-borrower to be a co-owner in order to claim tax benefits. You cannot get tax benefits if you are only a co-borrower and not a co-owner. Co-borrowers, who are also co-owners, are eligible for the tax rebate in the proportion to their share in the loan. The repayment capacity of each spouse will be taken into account while arriving at the share of the loan. The shares of the loan may be in any ratio. The tax benefits would be shared in that proportion only. You have to specify the share of the property and other loan details on a stamp paper. In case a husband and wife pay Rs.2.4lakh as interest and Rs. 100,000 as principal, each has an equal share in the borrowing, and each can claim Rs. 120,000 towards interest (subject to maximum of Rs. 150,000) and Rs.50,000 towards principal in their respective income tax returns. The maximum tax deduction for a single borrower is Rs. 1.5 lakhs. This deduction would apply to each borrower. In case one of the co-owners does not have any income, the other co-owner should enter into an agreement with the spouse. The agreement should state that the entire repayment is met by only one borrowers income. This would ensure that the main applicant will have 100% beneficial home ownership, and consequently, he can avail all the tax benefits applicable to a single borrower. Each borrower needs a copy of a borrowers certificate. It has to be provided to claim their respective tax relief. A co-borrower should enter into a simple agreement with the spouse on stamp paper of Rs.100. This agreement should basically contain the shares of the ownership along with that of the home loan availed by the couple. The borrowers should take two copies of the interest and principal paid certificates from the bank and each can submit a copy of the certificates along with a copy of the agreement signed between them.
Yes, you can claim income tax exemption if you are a co applicant in a housing loan as long as you are also the owner or co-owner of the property in question. If you are only person repaying the loan, you can claim the entire tax benefit for yourself (provided you are an owner or co-owner). You should enter into a simple agreement with the other borrowers stating that you will be repaying the entire loan. If you are paying part of the EMI, you will get tax benefits in the proportion to your share in the loan.
Also, if you are a co-borrower, you could perhaps draw up and sign an agreement with other coborrowers (including your spouse) on splitting the liability. This will avoid any clashes in future
What are Tax benefits of Joint Home loan For One House?
The repayment of principal amount of the loan can be claimed as a deduction under section 80C up to a maximum amount of Rs.1 lakh individually by each co-owner. Each co-owner shall be entitled to the deduction individually on account of interest on borrowed money up to a maximum amount of Rs. 1.5 lakh. If the house is given on rent, there is no restriction on the interest amount. The tax benefits are according to the proportion of a loan.That is, if the ratio of the loan is 70:30, then a loan of, say, Rs. 50 lakh will be split into Rs. 35 lakh and Rs. 15 lakh and tax benefits on the interest/principal repaid will also be calculated based on this ratio.
If I buy a house jointly with my wife and take a joint home loan, Can we both claim income tax deduction?
Yes, if your wife is working and has a separate source of income, both of you can claim separate deductions in your income tax returns.The repayment of principal amount of the loan can be claimed as a deduction under section 80C up to a maximum amount of Rs.1 lakh individually by each coowner. In cases where the house is owned by more than one person and is also self-occupied by each coowner, each co-owner shall be entitled to the deduction individually on account of interest on borrowed money up to a maximum amount of Rs. 1.5 lakh. If the house is given on rent, there is no restriction on this amount. Both co-owners can claim deductions in the ratio of ownership.
My husband and I have jointly taken a home loan. He pays 75 percent of the EMI. What will be our individual tax benefits?
As you have taken a joint home loan, both of you are eligible for tax exemption for your share of the EMI paid. For claiming income tax deduction, the EMI amount is divided into the principal and interest components. The repayment of the principal amount of loan is claimed as a deduction under section 80C of the Income Tax Act up to a maximum amount of Rs 1 lakh individually by each co-owner. The repayment of the interest portion of the EMI is also allowed as a deduction under section 24 of the Act. In case you are living in the house for which home loan is taken, both of you shall be entitled to deduction in the ratio (3:1) on account of principal upto 1 lakh and interest on borrowed money up to a maximum of Rs. 1.5 lakh individually. If the house is given on rent, there is no restriction on this amount and both co-owners can claim deduction on interest in the ratio of ownership, 3:1 in your case.
I have a home loan in which I am a co-applicant. However, the total EMI amount is paid by me. What is the total income tax exemption that I can avail of ?
Yes, you can claim income tax exemption if you are a co applicant in a housing loan as long as you are also the owner or co owner of the property in question. If you are only person repaying the loan, you can claim the entire tax benefit for yourself. You should enter into a simple agreement with the other borrowers stating that you will be repaying the entire loan. If you are paying part of the EMI, you will get tax benefits in the proportion to your share in the loan.
Quite often it becomes a practical option to avail a joint home loan so as to increase the loan amount and get tax benefits too. In case a couple plans to buy a home by taking a joint home loan then there are added advantages that they can avail from the loan. While a joint loan permits the total loan amount to be higher by combining the repaying power of the both the applicants, it also provides tax rebate on taxable income of both. Both the individuals can now claim tax rebate on the principal (Under Section 80C) and the interest (Under Section 24) that is repaid by them. Here are some of the direct implications of a joint home loan: 1. As per the Income Tax Act provisions, in case of joint loans, all the co-borrowers can avail tax benefits. The maximum stipulated limit of Rs. 150,000 is applicable individually to both the borrowers (which imply that the total deduction possible will be limited to Rs. 300,000). 2. In order to avail the tax benefits through this provision the co-borrower of the loan also has to be the co-owner of the property. 3. The share in tax exemption that each co-borrower gets is in proportion to the share in the home loan availed by the co-borrower. 4. Where the husband and wife as co-borrowers are paying a total of Rs. 240,000 as interest and Rs. 100,000 as principal element of the home loan, each of them is entitled to a tax exemption of Rs. 120,000 on the interest part subject to a maximum of Rs. 150,000, and Rs. 50,000 each for the principal element irrespective of their overall tax returns for the year. 5. In cases where one co-owner is not earning then the earning partner has to enter into a legal agreement with the former to state that the entire burden of the home loan is being borne by the earning member. This will make the earning member to take full advantage of all tax exemptions available on the home loan. This agreement can be signed on Rs. 100 stamp paper. 6. Each borrower has to obtain the statement of payment made to the financier individually and submit the same separately in order to avail the tax exemptions. As is evident from the above implications the tax benefits can be doubled by availing a joint home loan when buying house. There is no upper limit for tax exemption on the interest amount paid except that each co-borrower can claim rebate of up to Rs. 150,000 only in any financial years. In certain cases where there are more number of co-borrowers such as other family members in a home loan the actual tax rebate availed towards payment of the interest element can be further increased. There are certain restrictions on joint loan applications such as sisters, friends and unmarried couples cannot apply or benefit from this scheme. A maximum of 4 to 6 joint applicants are eligible for tax rebate under this clause. Thus, availing a joint home loan is certainly a lucrative financial option to buy a house as well as save maximum possible on income taxes. Disclaimer: All information in this article has been provided by BankBazaar.com and NDTV Profit is not responsible for the accuracy and completeness of the same.
Often the terms co-signer , co-borrower and co-applicant are used interchangeably. There lies a thin line that distinguishes a co-applicant from a coowner . Housing finance companies and banks insist that all co-owners be co-applicants to the home loan. But the reverse need not always be true. All coapplicants need not necessarily be co-owners . Co-applicant is a person who applies along with the borrower for a loan. A coborrower along with the primary borrower accepts responsibility for repaying a debt. Since co-owners of a property should necessarily be co-applicants , one can include spouse as a co-applicant for a loan. In most cases, only your immediate relative is considered for a joint loan application like a parent or even brother in some cases. Usually, husband-wife , father-son or mother-son apply for a joint loan. Banks do not encourage friends or distant relative as a co-applicant for a home loan. A coapplicant becomes equally liable for repayment of the loan amount in case of default by the primary applicant . Mahesh plans to purchase a house for thirty lakhs in his wife's name. Since his spouse does not earn, Mahesh has to make loan repayments from his salary. Will he be eligible for tax benefits as monthly EMI repayments will be deducted from his bank account? In the first place both Mahesh and his wife have to be co-applicants for the loan. If Mahesh is neither the owner nor the co-owner of the apartment, he will not be entitled for any tax benefits on the loan repayments . If Mahesh's wife were employed then tax benefits for loan repayments are split in the ratio of the share in the home loan. A co-applicant who is not a co-owner is not entitled to tax benefits on home loans. An IT certificate will be issued in the name of both applicant and co applicant at the end of a financial year. Depending on their share of contribution towards loan repayment, the co-borrowers can claim tax benefits. Assume the borrower draws insufficient income or bears a poor repayment record. In such unfavorable circumstances, a co-borrower's involvement is a blessing for the loan applicant. Not only is the bank assured of timely loan repayment, the process of loan disbursement moves without major hiccups. Home loan borrowers are sanctioned anything from as little as two lakhs to as much as 85 percent of the cost an expensive property in a posh locality. Factors like your job, income, stability, and duration of employment, age, qualification, savings, assets, current liabilities and loan repayment history determine your creditworthiness . Increase your loan eligibility by simply adding your earning spouse or parent as a co-applicant . Liabilities of a co-applicant vary from one bank/HFC to another. Before signing on the dotted line, it worthwhile to talk with the bank/HFC as well as take legal advice on the liability of the co-applicant . Be it accidental death of the primary borrower or willful defaulting know your liabilities as a coapplicant from an expert.