Looking for an easier way to get your home loan sanctioned and approved without any hassles? You can consider applying for a joint home loan with your spouse or another member of your family. Buying a home with your spouse will naturally give you several added benefits. Both you and your spouse will be eligible for higher tax deductions along with home loan interest rate rebates. You also need to be aware of tax deduction laws and regulations.
Here’s taking a look at some of the ways that you can claim higher tax benefits on properties which are jointly owned by you and your spouse.
- You have to be co-owners of the property that has been purchased with a home loan
For getting home loan tax benefits equally, both of you need to be co-owners of the self-occupied property that has been jointly bought. You will then be eligible to get equal tax deductions on the principal and interest repayment for the home loan annually. For joint homes, both co-owners will be eligible for deductions up to Rs. 1,50,000 (maximum) on the principal repayment under Section 80C and you can also both get deductions up to Rs. 2,00,000 on the interest repayment of the home loan based on the share of ownership. In case this percentage is not specified, the interest will be equally divided where both co-owners can individually claim this deduction while filing their returns.
However, both co-owners cannot claim equal tax benefits in case the same interest or principal amount is paid against the loan. If one of the two joint owners wants to get tax benefits on the entire amount, an NOC (No Objection Certificate) has to be obtained from the other co-owner or co-borrower stating that he/she wishes to forfeit the exact amount (has to be specified) in tax benefits. Both borrowers should also make sure that deductions claimed against the registration charges and stamp duty under Section 80C are listed within the same financial year.
- Registration as a co-borrower of the home loan is a must
Along with being a co-owner of the home, your spouse or family member should also be registered as the co-borrower for getting the tax benefits. Only a co-owner will not get the tax deductions. This regulation has been mandated since co-owners may not always contribute towards repayment of the home loan EMI although co-borrowers will hold responsibility for the same.
- Construction of the property that has been bought with the home loan must be completed
Another essential condition for getting joint home loan tax benefits is that the construction of the property should be completed. Borrowers can start getting tax benefits from the financial year in which construction of their home has been finished. Borrowers can claim interest repaid in the development stage in 5 equal installments starting from the financial year in which construction has been finished and the property is ready to move into.
Banks and other financial institutions approve joint home loans faster due to the shared responsibility for repaying the home loans in question. Along with applying for the home loan with your spouse, you can both save a lot of money in tax deductions. You can also purchase a property with your siblings and parents, listing 6 members as joint property borrowers and owners at a maximum. However, all combinations of co-owners are not acceptable to financial institutions so check the same prior to applying.