Besides splitting the costs of purchase, joint ownership of property offers various tax benefits as well. Here, in this guide, we list out the different scenarios of how joint property ownership impacts the income tax of individuals.
- Tax Benefits on Joint Home Loan To avail tax benefits on a joint home loan, you must meet the following conditions:
- You must be a co-owner of the property
- You must be a co-borrower of the loan
- Construction must be complete
- Deduction on the Interest Paid
- For a self-occupied house – The owners of the property (who is also a co-borrower) can claim tax deductions up to Rs. 2 lakhs for the interest paid on the home loan. The total interest paid is divided among the co-owners based on their share in the property.
- For a rented property – If you have rented out the property, each co-owner can claim a deduction if the amount of loss from the property does not exceed two lakhs.
- Deduction on the Principal – Each co-owner of the property can claim a deduction in income up to a maximum of 1.5 lakhs for repayment of the principal. Note that this is within the overall income tax limit of 1.5 lakhs fixed under Section 80C.
When it comes to joint properties, each co-owner is eligible for tax deductions up to Rs. 50 lakhs under Section 54EC.
Joint Property Ownership offers multiple Tax BenefitsAs you can see, you can increase the overall tax benefits when you purchase a property jointly with family or friends. Make sure to define the allocation of shares in the house property clearly, to enjoy these tax-saving benefits.
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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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