How To Claim Tax Benefits On Joint Home Loan

Conditions for Claiming Tax Benefits on a Joint Home Loan

Below are the conditions that individuals holding a joint home loan have to fulfil for claiming the applicable tax benefits:

• Both have to be co-owners of the property: Only individuals who are co-owners of the property would be able to claim tax benefits on the home loan taken against the same property. On instances where a home loan has been taken by more than two individuals, when both of them are not registered owners of the property for which the home loan has been taken, both the borrowers will not be eligible for tax benefits on the home loan. Only the individual who is the registered owner of the property can avail the tax benefits on the home loan.

• Both have to be co-borrowers of the home loan; Individuals who are the co-owners of the property against which a home loan has been applied for, also have to be co-borrowers of the loan to avail the applicable tax benefits. Borrowers who are not contributing to the home loan EMI will not be eligible for tax benefits on home loan for joint owners.

• Property construction must be complete: The property on which the home loan has been taken will have to be completed to be eligible for tax benefits on home loan for joint owners. Tax benefits can be claimed from the starting of the financial year in which construction of the property has been completed. Tax benefits are not applicable for a property that is still under construction. Expenditures made towards the property before its completion can be claimed in five equal instalments, beginning from the year in which construction is complete.

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The practise of changing the loan amount is commonplace, especially during a cash crunch, arising from various instances - sudden loss of employment, hospitalisation due to illness or accident, study leave for pursuing a specialised educational course, pregnancy, or any other reasons. However, it is highly recommended that individuals not resort to changing the loan amount. Instead, other options like finding other family member or friend should be explored, so that the ratio of loan repayment remains constant throughout the home loan tenure.