Tax Benefits of a Joint Home Loan

Going for a joint home loan is a good idea when you wish to share the financial responsibility, which is, without a doubt, a considerable one indeed. Sometimes, a joint home loan is a necessity, say, when a bank denies your home loan application due to low credit score.

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Although joint home loans have their benefits, one that’srelatively less known of these is tax savings. Yes, the co-borrowers of a joint home loan can enjoy tax benefits under sections 24B and 80C.

What are the tax benefits?

The tax benefits of home loan and joint home loan differ, as explained below:

Tax Benefits of Home Loan

As per Section 24B, you are entitled to claiming tax deductions on the interest paid on the home loan up to Rs. 2 lakhs per year.Similarly, Section 80C allows you to claim tax deductions up to Rs. 1.5 lakhs per year on the payments made for the principal loan amount.  Thus, you can save up to Rs. 3.5 lakhs on tax in a home loan.

Tax Benefits of a Joint Home Loan

In the case of a joint home loan, since both the co-borrowers (assuming there are just two) own 50:50 share of the property, they both get tax deduction benefit of Rs. 2 lakhs on the interest amount, and 1.5 lakhs on the principal amount.

Thus, you can easily see that a joint home loan not only divides the responsibility but also allows the borrowers to save a considerable amount of money on tax.