How to get tax benefit on Joint Home Loan
Home Loans are a great way to secure your dream home. But why do people opt for a Joint Home Loan when you can get one on your own?
Simple; because Joint Home Loans bring along a whole lot of benefits that you won’t find in a regular Home Loan.
What is a Joint Home Loan?
A housing loan that you can take along with the members of your family (parents, siblings, spouse, and children) and repay with a split financial responsibility is a Joint Home Loan. You must have seen many people take up a Joint Home Loan with their wife in India; they are one of the most popular Joint Home Loans in the market. However, if you’d like to, you can opt for a Joint Home Loan with your parents or close relatives.
Tax benefits of a Joint Home Loan
Being a co-owner of the property is mandatory to maximize Joint Home Loan tax benefit. But what are the benefits and exemptions on Joint Home Loan Income Tax? India has allowed suitable tax exemptions to people who have taken up a Joint Home Loan.
Let’s take a quick look at the tax benefits provisioned by the Income Tax Act, for co-applicants of a Joint Home Loan.
- Section 24
Once you have cleared your outstanding amount on the Home Loan, you are entitled to a tax exemption on interest of up to Rs. 2 lakh under this section. The property, however, should be the only property you own and needs to be self-occupied, in order to avail this deduction.
- Section 80C
A tax redemption of up to Rs. 1.5 lakh on your entire principal amount can be applied under this section. You can apply for a loan as soon as the construction of your home is complete. The exemptions are invalid for property that are still under construction, or that will be let out for rent.
Quick tips to get a Joint Home Loan
In order to get an assured approval on your Joint Home Loan, there are some conditions to be met, that also grant you the tax benefits.
- While 2-6 is the acceptable range of co-applicants on a joint loan, some financial institutions have a varied preset.
- Ensure your co-applicant is also a working individual, as you will be entitled to greater loan amounts and tax benefits on your principal amount.
- Make sure you allot proportions that match the income of each co-applicant, to get maximum benefits. For instance, if your son is earning more than you, you can grant him a greater proportion of the loan amount, which in turn ensures that he gets a higher tax deduction.
- Ensure all the applicants have an individual life insurance policy, so that the other members are unaffected by the death of one of the co-borrowers.
Joint Home Loans are loaded with tax benefits and are definitely a great option to consider if you want to amplify your Home Loan benefits. Just ensure that you know all the requirements and regulations involved with availing a loan from your chosen financial institution before applying for a Joint Home Loan to prevent unwanted financial or legal burdens.