Know the Benefits That You Can Get on Your Joint Housing Loan

Joint Housing Loan

One of the most remarkable and necessary measures taken during the 2019 Budget was the incorporation of a new home loan tax benefit to convenience borrowers. This tax benefit is exclusively available to first-time home buyers and furthers the government’s cause of affordable housing for all. In tandem, financial institutions have also bolstered their credit structure to allow borrowers more convenience.

In the context of these developments, several financial experts consider the current fiscal year to be one of the most advantageous years for borrowers.

Home loan tax benefits for joint homeowners

As per the Income Tax Act, 1961, there are primarily two sections under which homeowners can avail tax exemptions on their home loan repayment. These are –

  • Section 80C.

  • Section 24(b).

In addition to these, a temporary section has also been included in the IT Act, 1961 – Section 80EEA.

In case you co-borrow a home loan and co-own a residential property, the extent of home loan tax exemptions is doubled. It is because both you and your co-borrower are individually entitled to such exemptions under the IT Act.

Everything that you need to know about saving tax when you take a home loan are discussed below –

  • Tax exemption on interest payment

The interest you repay on your home loan for a self-occupied property is exempted from tax under Section 24(b) and 80EEA.

  • Section 24(b)

The exemption limit for Section 24(b) is capped at Rs.2 lakh per year, which joint owners and joint borrowers can claim individually.

In the case of let-out properties, there is no maximum limit for exemption. The tax liability on the home loan interest is adjusted against income from housing property. If such tax liability exceeds income, it shall be carried forward to the subsequent 8 years for adjustment.

Section 24(b) is strictly applicable to home loans borrowed for fully-constructed properties. In the case of under-construction properties, tax exemption rules apply differently.

The home loan tax benefits for under-construction properties are not available under this section. After the construction is complete, you can claim tax exemption on the interest component of your home loans during such a period in five installments over the next 5 years of tax filing.

However, your construction should be completed within 5 years from the date of availing such a home loan to enjoy tax benefits under Section 24(b).

  • Section 80EEA

Section 80EEA, which was introduced in the Budget 2019, is available to first-time homebuyers. It allows a tax exemption of Rs.1.5 lakh per year over and above Section 24(b), effectively increasing annual tax exemption to Rs.3.5 lakh on the interest portion of loan repayment. It is a temporary addition and is only available on home loans availed within 31st March 2020. Also, the section is only applicable for houses with stem value within the limit of Rs.45 lakh.

  • Tax exemption on principal repayment

You can claim tax benefits of up to Rs.1.5 lakh on the principal component of your home loans under Section 80C. This tax exemption is available on fully-constructed properties to individual owners. In the case of joint owners, therefore, it extends to Rs.3 lakh on principal repayment.

However, if you sell the housing property 5 years from its occupation, tax exemptions to such point shall be revoked and added to that year’s income to be taxed. In the case of under-construction properties, there are no exemptions under this section.

You can calculate your income tax benefits from a year with the use of a home loan tax benefit calculator before filing your returns. It is an online tool that makes assessment precise and time-saving.

Richa Sharma is a freelance author and writes for a variety of online publications. She actively writes blogs and articles and very fond of writing content on different trendy topicss related to Education, training,resources,health and technology.