Is Tax Benefits on Home Loan Also Available to a Co-Owner?

Taxes

oi-Sunil

By Sunil Fernandes

Published: Wednesday, October 29, 2014, 8:12 [IST]

Home Loans have become a great way to save Income Tax in India, particularly in view of the fact that tax exemption on these loans have been raised in the recent budget.

So, if you are paying an interest of Rs 2 lakh on your home loan, you can claim the entire amount as deduction towards Income Tax. Earlier, the limit was Rs 1.5 lakh, but, Union Finance Minister Arun Jaitley raised the limit this year. One of the conditions to claim tax benefit on interest paid is that the purchase or construction of the house must be completed within three years from the end of the financial year in which the loan was taken.

Apart from this the principal amount paid towards the home loan also qualifies for tax benefits under Sec 80C of the Income Tax Act.

Is Tax Exemption Benefits on Home Loan Also Available to Co-Owner?

The answer to the above question is yes. If you are co-owner of the house and also a joint applicant to the loan, there is no problem whatsoever in claiming tax benefits.
Do remember, that if you are a co-applicant to the loan, but, have the house is not on joint names, you cannot claim tax benefit.

Another important thing to remember is that stamp duty and registration fees paid towards the purchase of a house also qualify for tax breaks under Sec 80C of the Income Tax Act.

Conclusion

It's always a good idea to go in for a joint home loan and as a co-applicant as well. This will allow both the co-owners to claim tax benefits in case your home loan and interest rate payment is high. For example, if you are paying principal amount of Rs 4 lakh every year on your home loan, you can get tax benefit only upto Rs 1.5 lakh under Sec 80C, which is the upper limit. By co-opting for the loan together you can get Rs 3 lakhs. Therefore, it's always a better proposition to jointly go for a home loan as well as a co-applicant to the ownership of the house.

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