A housing loan is a long-term commitment. Given that the loan amount is high, specific tax laws offer respite to loan applicants. So, opting for a joint home loan scheme becomes a sensible decision.
Applying for a joint housing loan increases a claimant’s loan eligibility. One can opt for a joint home loan with immediate or close family members like parents, spouse, or adult child. The borrower only requires that both the applicants are employed and qualify for the tax exemptions.
Learning how to qualify for joint home loan tax benefits might be excruciating. But ensuring that you meet the following criteria can simplify the process of gaining tax benefits.
Conditions to Apply For Joint Home Loans:
Here are the three circumstances under which one can claim tax benefits for joint property loans.
#1 A Co-Owner of a Property Purchased Via Loan
The most straightforward process of applying for the joint home loan tax benefit is ensuring that the claimant is a co-owner of a property purchased with a loan. Note that it must be a self-occupied property. If not, you won’t be eligible for the tax deductions on the interest payment and principal amount repayment.
One quick note: Borrowers may feel confused about the joint home and may wonder whether the joint owner can claim equal tax benefits if the same principal amount or the latest home loan interest rate gets paid. But in such cases, they cannot do so.
In another case, when one joint owner wants to claim tax benefits on the whole amount, the applicant requires obtaining the NOC or No Objection Certificate from the co-borrower. The co-borrower must specify the amount, stating their will and forfeiting joint home loan tax benefits. In addition, both borrowers should ensure that deductions against the stamp duty and registration charges are claimed within that fiscal year.
#2 An Applicant Must Be a Registered Co-Borrower of a Housing Loan
In numerous cases, the immediate member of a family (spouse, adult child, or parent) gets included to enhance the loan eligibility. However, the co-applicant might not have their shares in that purchased apartment or house. The tax benefits might not be claimed if a co-borrower isn’t a joint owner.
So, besides being a property co-owner, the applicant must register as a co-borrower of a housing loan. You can only receive or claim the tax benefits with that loan scheme. Suppose a property owner isn’t a borrower of a home loan. In that case, they won’t be eligible for the tax benefits.
This rule gets applied because a co-owner might not contribute to the loan EMI repayment. However, the co-borrower is always responsible for repaying the loan EMIs or defaults on any EMI repayment.
#3 The Purchased Property’s Construction Should be Complete
The final condition to opt for tax benefits on the joint housing loans is the property construction must get completed. Borrowers may start claiming the tax benefits from a financial year – the year when the construction gets completed. Borrowers might claim for the interest paid during the development stage in five equal installments. It usually starts with the financial year when construction is complete, and the house is ready for its possession.
How to Determine the Share of Applicants in a Joint Housing Loan?
The property share remains fixed when it gets purchased. It might be in various forms:
- It might be by way of the equal down payment contribution with the parties who hold an equal stake in the loan.
- One of the parties might have paid the entire loan share via a down payment and may get listed as the joint owner and co-applicant
- One of the applicants’ names might not have got mentioned clearly in the loan agreement (or the certificate issued by a lender)
In all these cases mentioned above, both applicants’ shares might be presumed equal until and unless some exceptional circumstances arise. You also have to know about home loan interest rates in order to claim joint home loan benefits.
A Quick Thought
Before claiming the benefits under the joint housing loan, remember that lenders are more likely to approve the loans about their repayment responsibility. Besides listing your spouse as a co-borrower or co-owner, you may even reduce the tax outgo by buying the apartment jointly with siblings or parents.
You can list around six members as joint property borrowers or owners. But remember, there are only specific categories of co-owner combinations that lenders accept. Let the lender confirm your approved combinations before applying for the housing loan. So, as elucidated above, the conditions help you obtain tax benefits on the joint home loan. And, if you want to learn about the latest home loan interest rate in home loans, visit Grihashakti. They can provide you with all the details about a loan for buying new homes, home improvement, extensions, etc.