WHAT IS A JOINT HOME LOAN?
Joint Home Loans are something which homemakers often prefer over home loans by a single entity, especially taking home loan in Delhi could be a major task. The main advantage of this kind of home loan is that both partners /entities can combine their efforts and pay off the loan as quickly as they possibly can. As we know, based upon the home loan eligibility, the true amount as per the home loan calculator is quantified and you get the loan amount, it’s true in the case of joint home loans as well. The main benefit which can be availed using a joint home loan is tax benefits. Sounds a bit intriguing, but this is the absolute truth. Tax benefits on joint home loans are available and preferable but having the ownership of the property is a prerequisite to avail it. If you are a contributing entity in this joint home loan, you are a vital part of it which makes you the indispensable part of this property and that is important.
WHAT SHOULD BE DONE?
But what makes you eligible for tax benefits on a joint home loan is a point to be covered and considered. Below are some of them,
- CO-OWNER OF THE PROPERTY: For getting the tax benefits from your joint home loan, it is essential that you are a vital asset to this property. In layman’s terms, you need to be a co-owner of the property. There are instances when a loan is taken jointly, but the one who borrows doesn’t necessarily mean that he is the owner and thus it would be difficult for that individual to get tax benefits.
- CO-BORROWER OF THE LOAN: Apart from being an owner of the property, there is another condition which satisfies the criteria is the co-borrower of the loan. Co-borrower is someone who actually in essence borrows the home loan and contributes to paying off the home loan installment amounts. Those entities which do not contribute in paying them do not come under the tax benefit ambit.
- TAX BENFEFIT CLAIM RATIO: There are also certain instances when both the co-owner and the co-borrower are not contributing in paying the home loan installments. That directly violates the conditions and you would not be able to avail the tax benefits. Also there is a certain limit of the loan amount wherein you can claim benefits on interest. Under Section 80C of the Income Tax Act, a co-borrower can claim benefits on tax amounts up to 1.5lakhs every year. So, basically depending upon the ratio with which you are paying your home loans, you will get the tax benefits accordingly.
DETERMINATION OF AN INDIVIDUAL’S SHARE IN THE HOME LOAN:
Your property share is set at the time you take it in the initial agreement. But your level of contribution towards down payment and also a specific amount which is to be paid during your home loan tenure also determines your property share. Not contributing in paying up the loan makes you a null and void entity even though you are a co-borrower or a co-owner. Also your share in the home loan is not mentioned in the sanction letter given to you or any kind of home loan certificate. It is only determined by the payments which you make for paying off these loans and you should always prepare a MoU (Memorandum of Understanding) which clearly depicts the share amounts plus it needs to be stamped from the respective authorities.
Moreover, an understanding of all these processes is extremely important so that you can be aware of the ins and outs of it and the next time you would be more aware of the situation.