A home is a place of pride, and it is only right that both the husband and wife are co-owners. Beyond a shared sense of accomplishment, joint ownership offers various tax benefits.

Here, in this guide, we show you how couples can claim home loans and HRA to avail tax benefits.

How to claim HRA tax-benefits as a couple?

Most employers offer HRA benefits to employees for meeting their home rental expenditure. Though HRA is included in the basic salary, it's not fully taxable. You can claim tax deductions on it. To optimize the tax-benefits from the HRA exemption, you can split it with your spouse.

To give an example, let's state both you and your partner are working and are eligible for HRA. Instead of one person paying the entire rent, split it with your partner to enjoy higher tax savings.

Now comes the big question – in what proportion should the HRA claim be split between the husband and wife? Here are a few general rules of thumb to follow:
  • If both the husband and wife are in the same tax slab, then the rent paid can be split 50:50 to enjoy higher tax savings.
  • However, if one person is in a higher tax slab, then he/she should claim a bigger chunk of the rent paid. Ideally, the person in the higher tax bracket can pay 120% of the HRA allowance as rent, and the other partner bears the balance rent.
Note that for both husband and wife to claim tax deductions on the rent paid, both have to pay their share of the rent separately to the landlord and receive individual receipts. However, if that’s not possible, one person can pay the rent to the landlord, and the other person can pay his/her share to the partner. One point to remember here is that rental transfers to a partner must be done as a bank transfer or cheque and not via cash.

How to claim home loan benefits as a couple?

If both you and your partner are co-owners and co-borrowers of your residential home, here’s how you can both claim home loan benefits and enjoy higher tax-savings:
  • Each partner can claim up to a maximum of 2 lakhs as a deduction on the interest paid for the home loan. Let's say, the annual interest you pay for your home is 3.5 lakhs. One person can avail the maximum deduction of 2 lakhs, while the other person can avail deduction for the remaining 1.5 lakhs, thereby lowering your tax returns.
  • Besides deduction on interest, each co-owner can claim a deduction of up to 1.5 lakhs under Section 80C for the repayment of the home loan principal. Note that this 1.5 lakhs is included within the overall limit of Sec80C.

Plan your Taxes Together to Enjoy Higher Benefits

As couples, it's always a good idea to plan together before you file your taxes to enjoy higher tax-savings as a couple.

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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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