How to Find Tax Deduction on Joint Home Loan

When it comes to buying a home, it's not just the price of the property and its legality taken into consideration, but also various other factors need to be assessed like nearby market, school, distance from the office, family commitments, etc.

The affordability of home and the cost of borrowing is certainly expected to come down as the RBI has made it mandatory for banks to link their Home Loan scheme with a repo rate. But the process of choosing a home and buying goes through a though process of picking the right builder or broker along with the authorized locality.

There are a lot of chances of fraud when you are out there looking for the right home. Thus, it demands the utmost care and prudence in the whole process of searching for the home and agreeing on the right price.

In situations where there are more than one earning member in the house, the affordability factor can certainly take a jump if you opt for a Joint Home Loan. Availing a joint home loan will also double the tax advantage you get with a Home Loan.

 How to Find Tax Deduction on Joint Home Loan             

So, if you take a Joint Home loan which is linked to the repo rate, it will be the best deal you can get. However, to avail joint home loan tax deduction, there are few eligibility criteria:

  • You must be a co-owner

  • You must be co-borrower

  • Also, the tax benefit can be availed after the construction is complete.

Tax Benefit on Interest

If you have availed home loan for the purpose of self-occupying, then you can claim up to Rs. 2 lakh as a deduction for interest paid on home loan under Section 24 of Income Tax, Act. In the case of joint home loan, each borrower can claim their share of deduction separately, which makes the total eligible deduction on interest paid for a home loan to be Rs. 4 lakhs. Although, do remember that total deduction claimed cannot exceed the actual interest paid during that year.

Tax Benefit of Principal Repayment

For the repayment of the principal amount, you can claim deduction up to Rs. 1.5 lakhs under Section 80C of Income Tax, Act. In the case of the joint home loan, the total eligible deduction becomes Rs. 3 lakhs. Just like interest deduction, for principal deduction as well you cannot claim the amount more than you have paid for that year.

Tax Benefit on Stamp Duty and Registration Cost

Payment made for stamp duty, and the registration fee is also eligible for tax benefit. This benefit is covered under Section 80C, but the deduction for stamp duty and registration cost must be claimed in the same year in which it is paid.

These tax benefits on a home loan serve the purpose of encouraging people to avail a home loan and buy a house. Thus, you should never get into a mindset of availing home loan just for the sake of tax benefits. However, when when you really want to buy a home and have a blood relative or spouse who is also earning then opting for Joint Home Loan is the best option.