Joint Home Loan Tax Benefit: How to Claim Benefits

If you’ve taken a home loan with a co-applicant, you can both claim tax deductions and reduce your overall tax burden. Under the Income Tax Act, co-owners on a joint home loan can independently enjoy tax deductions based on their repayment share, provided they meet the required eligibility rules. Let’s understand how to claim these joint home loan tax benefits correctly to ensure you make the most of your joint investment.

What Is the Joint Home Loan Tax Benefit

A joint home loan tax benefit applies when two or more individuals jointly take a home loan and are co-owners of the same property. Each borrower can claim tax deductions on both the principal and interest paid, based on their share of repayment. This joint housing loan tax benefit falls under Sections 80C and 24(b) of the Income Tax Act.

For example, if both co-owners contribute equally, each can claim up to INR 1.5 lakh on principal repayment under Section 80C and INR 2 lakhs on interest payment under Section 24(b), effectively doubling the total deduction benefit for the property. This structure not only simplifies shared ownership but also enables both parties to balance repayment duties while maximising individual tax savings.
In essence, the tax benefit on a home loan for joint owners allows both applicants to share repayment responsibility and reduce their overall tax liability independently.

Conditions to Claim Joint Home Loan Tax Benefits

To claim a tax benefit on a home loan for joint owners, you must satisfy the following conditions:

• Both applicants must be co-borrowers on the home loan in joint names for the tax benefit.
• Both must also be co-owners of the property.
• The ownership share of each co-applicant should be clearly defined in the property documents.
• Loan repayments must be made from a joint account or through a verifiable payment trail that reflects each borrower’s contribution.
• The property construction should be complete, or it must be ready for possession. If the property is still under construction, tax deductions on the principal and interest might be limited or delayed until the property is ready for occupation.
• Each co-owner must file their individual income tax return to claim their share of deductions.

Fulfilling these basic requirements ensures a smoother claim process for anyone seeking a home loan joint account tax benefit.

Deductions Available Under Joint Home Loan

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When you take a joint housing loan, both borrowers can claim these deductions:

• Principal Repayment (Section 80C): Each co-owner can claim up to INR 1.5 lakh per annum on the principal portion of the EMI.
• Interest Payment (Section 24(b)): Each borrower can claim up to INR 2 lakhs annually on home loan interest paid for a self-occupied property.
• Stamp Duty & Registration Charges: Deductions for stamp duty and registration charges are also allowed under Section 80C, provided these expenses are incurred in the same financial year as the property purchase and within the overall Section 80C limit.

When combined, these deductions provide a considerable financial advantage to both borrowers under a joint account home loan tax benefit.

How Interest & Principal Are Apportioned

The tax benefit for a joint home loan is divided according to how much each borrower contributes. Usually, the split is based on:

• Ownership Ratio: The percentage of property ownership defined in the purchase deed.
• Repayment Contribution: The proportion of the EMI (principal and interest) that each co-owner pays.

The home loan interest certificate issued by the lender should specify the annual interest and principal amounts, which help both parties claim their rightful deductions.

Maximum Limits & Restrictions on Joint Housing Loan Tax Benefits

The following limits apply when claiming a home loan joint tax benefit:

• Up to INR 2 lakhs deduction on interest for a self-occupied property under Section 24(b).
• Up to INR 1.5 lakh deduction on principal repayment under Section 80C.
• For let-out (rented) properties, there is no upper limit on interest deduction; however, a maximum of INR 2 lakhs in loss from house property can be set off against other income in a single financial year.
• Any unadjusted loss can be carried forward for up to eight assessment years and adjusted against future income from house property.
• Deductions under Sections 80C and 24(b) are available only under the Old Tax Regime.

How to Claim Tax Benefits on Joint Home Loans: Step-by-Step Procedure

Here’s how to claim tax benefits on joint home loans easily:

• Ensure Eligibility: Both borrowers must be co-owners and co-borrowers of the property.
• Obtain a Loan Certificate: Request an interest certificate from the lender that shows the total interest and principal paid during the financial year.
• Calculate Your Share: Determine how much of the repayment you’ve contributed.
• File Your ITR: Each co-owner must file their individual tax return, mentioning their share of deductions.
• Submit Documents: Attach proof such as loan statements, ownership papers, and payment receipts.
• Claim Under Correct Sections: Principal under Section 80C and interest under Section 24(b).

These were some of the ways to claim tax benefits on joint home loans, which ensures a smooth process.

Worked Examples: Home Loan in Joint Name Tax Benefit

Let’s consider the following 2 scenarios:

If both borrowers contribute equally, each can claim a total of INR 3.5 lakhs in deductions (INR 1.5 lakh principal + INR 2 lakhs interest), giving a combined benefit of INR 7 lakhs.

When the ownership and repayment ratio is unequal, each co-owner can still claim deductions in proportion to their share, up to the maximum permissible limit. Even though Co-owner A contributes more towards repayment, both can claim the full deduction under Sections 80C and 24(b) if their individual repayment amounts meet the respective limits.

Such examples highlight the tangible difference a tax benefit on a home loan for joint owners can make in lowering your yearly tax outgo.

Conclusion

A home loan in a joint name tax benefit helps you share financial responsibility, but also doubles your potential tax savings. By planning ownership and repayment contributions smartly, both borrowers can enjoy maximum deductions under Sections 80C and 24(b).

Exploring joint home loan options? SMFG Grihashakti offers loans of up to INR 1 crore* at home loan interest rates starting from 9.25%* per annum. Check your eligibility and apply for home loan today to make the most of your joint home loan tax benefits.

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