Home loan tax benefits that you get when you buy a property jointly with your spouse
This article tells you why it is a good idea to buy a home jointly as a couple and it is not only the tax benefits you get.
This article tells you why it is a good idea to buy a home jointly as a couple and it is not only the tax benefits you get.
This article is a part of our detailed article series on the concept of home loans. Ensure you have read the other parts here:
This article breaks down the benefits of prepaying your home loan and how it impacts both your interest payments and tax savings.
This article shows how quickly you can pay off your home loan, and even save a lot of interest, by increasing your EMI steadily year-on-year.
This article shows you an easy way to calculate how big a house you can buy based on your family’s combined monthly salary.
Home loan rate hike? You can prepay to keep EMI and tenor same. This post shows how.
This article shows how paying a small fee to your bank to reduce your home loan rate can save you lakhs in interest over the life of your loan.
This article shows you the benefits due to interest saving when you make a part-payment to your home loan. Your loan duration also reduces due to the pre-payment.
This article shows a handy ready reckoner for home loan EMI amounts for all tenures and interest rates along with the amount of principal and interest to be paid.
This article helps you decide when to prepay your home loan - at the beginning, middle or end of the total loan period.
This articles describes overdraft home loans like SBI Maxgain and BOB Home Loan Advantage.
This post discusses managing when interest rates go up increasing your home loan EMI.
Summary
Banks generally do not sanction a home loan where total EMI is more than 30% of the income of the borrowers. As a simple thumb rule of ₹1 lakh EMI/crore of principal, for a 15-year loan at 9%, we can see that
Therefore, the home loan that you are are eligible for will be at most 30 times the in-hand salary. The down-payment will be on top of that. If we formalise the calculation, here are a few sensitivity tables: Home Loan Eligibility for Joint Applicants: how to buy a bigger house
Home loan tax benefits are of two types depending on the construction status of the house.
If the house is ready to move, then
If the house is under-construction, then
None of these deductions are applicable in the new tax regime. Section 24B is available in new tax regime only if the property is let out and not self occupied.
As a home owners should always check first if you will save more tax in the new tax regime in this case: Which is the best tax regime to choose from April?
In the rest of the article below, we will assume that by “joint”, both spouses are owners of the property as per registration records i.e. the title deed. Otherwise, the benefits are not applicable.
It is generally assumed that the proportion of ownership is 50:50, but other proportions are possible and in each case, the calculation for deductions and benefits will be adjusted in the same proportion.
If a couple take a home loan jointly, they get
The joint owners must be paying loan EMI in the same proportion as the ownership in the house and calculate the tax deduction on principal and interest as per interest certificate obtained from the bank in the same ratio.
If the home is rented out, then a standard deduction of 30% on the Net Annual Value (NAV) of the property is allowed under Section 24A. In practical terms, if the rent is ₹20,000/month, only ₹14,000 is taxable. For joint owners, the rent gets split in the proportion of ownership and the standard deduction is applicable to both owners.
To keep all the transactions above board, the couple must:
When one spouse passes away, the other retains ownership of their proportion of the property without doing anything else like running around for mutation. The legal heirs of the spouse who passed away become the owners of that share.
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This post titled Home loan tax benefits that you get when you buy a property jointly with your spouse first appeared on 18 Feb 2024 at https://arthgyaan.com