Instead of applying home loans in your individual name, you can apply jointly to get higher loan facility and at the same time you both can get higher income tax deductions. In this article we will tell you how a joint home loan can be a better tax saving option for you.
As per income tax act, you get income tax benefits on your principal and interest amount of home loan. Let us discuss how you both can jointly take benefits of these deductions.
In case of self occupied property the income tax deduction for interest on home loans is Rs. 1, 50,000. There is no restriction on number of claim i.e. if you are jointly owned a house or home then each one of you will be treated as owner under income tax act to claim deduction under section 24 i.e. each joint owner can claim Rs. 1, 50,000 per year.
However, for a house which is let out on rent, each joint owner can claim full interest amount as deduction as there is no limit on this. Rs.1, 50,000 tax benefits as we discussed above is available only for self occupied house property.
Tax benefits will depend on the proportion of share that each owner has on the property. If you are holding only 40% share then first calculate your portion of interest paid or payable and then restrict it to the maximum deduction allowed under section 24.
Income tax deduction for the principal portion of home loan can also be claimed by each co owner subject to the maximum limit of Rs.1, 00,000 as specified under section 80C of income tax act.
If both husband and wife are working and getting salary income or some taxable income then joint home loan can be a better tax saving option for both. You both can take income tax benefits by claiming interest as well as principal amount as tax deduction from your income. To claim income tax benefits you are required to produce a certificate from the bank stating the interest and principal amount separately for the whole financial year.