Top 5 Tax Benefits and Other Advantages of a Joint Home Loan

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25 JUNE, 2021

Joint home loans not only help you share the burden of repaying the borrowed amount but also offer several other benefits. One of them is home loan tax benefits that enable you and the co-applicant to claim income tax deductions individually. There are other benefits of joint home loans that you should keep in mind. Find out the top 5 benefits of joint home loans below.

Tax savings under Section 80C

By opting for a joint home loan, each co-applicant can claim the principal component of the EMI under Section 80C of the Income Tax Act. A maximum amount of Rs 1.5 Lakh per financial year is allowed. This benefit also extends to the stamp duty and registration fee that you can claim only once. However, you should remember that the tax benefits under Section 80C are shared amongst various investment tools. Thus, you must plan your finances for easy income tax savings.

Tax benefits under Section 24(B)

Under Section 24(B) of the Income Tax Act, both co-applicants can claim the interest component of the EMI. The tax benefit you can claim is capped at Rs 2 Lakh per financial year for the interest payments. But the construction of your home should be completed within 5 years of the home loan commencement. If it isn’t finished within this period, the eligible amount reduces to Rs 30,000.

Home loan tax benefits under Section 80EE

As first-time home buyers, you can enjoy additional home loan tax benefits under Section 80EE of the Income Tax Act. You can claim a maximum amount of Rs 50,000 on the interest payment per financial year. However, the value of your property should not exceed Rs 50 Lakh while your home loan must not be more than Rs 35 Lakh to claim it as a deduction under Section 80EE. In case both co-applicants are paying the home loan EMIs, then two of them can claim this benefit individually.

Better interest rates for a woman co-applicant

You can avail better interest rates if the joint home loan is taken with a woman co-applicant. Hence, if you are applying for a loan with your spouse, you can get a concessional rate that is lower than the standard rate. However, it is recommended to understand the terms and conditions of this as some lenders may require the female co-applicant to be a co-owner of the property as well.

Increased loan eligibility

Your home loan eligibility is decided based on your credit score, repayment history, income, and other such factors. In case you have a lower income or credit score, adding a co-applicant with a better track record can help enhance your loan eligibility. If the lender considers the income of both co-applicants for the home loan, your eligibility for a higher amount also increases.

Such home loan tax benefits go a long way in reducing your income tax burden and fulfilling your dream of purchasing a house. You can make use of joint home loans not only to avail lower interest rates but also to boost your loan eligibility.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

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