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Tax & Loan Eligibility benefits from Home loan in Joint Names


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Title: Tax & Loan Eligibility benefits from Home loan in Joint Names

Tax Loan Eligibility benefits from Home loan in
Joint Names
The tax benefits are applied according to the
proportion of the loan taken by everyone involved
in the joint loan. For e.g. if the ratio of
ownership is 7030 then the loan amount of 50 L
will be split as 35 L and 15 L respectively and
interest/principal applicable to the respective
amounts will be taken into account for each
individual taking the loan. For claiming your
tax, it is best to procure a home sharing
agreement, detailing the ownership proportion in
a stamp paper, as legal proof for ownership.
  • To get the best out of the tax savings, it is
    good to let the partner with the higher pay make
    a higher contribution towards the home loan
    resulting in a better tax benefit collectively.
    In the case of an earning couple, this would make
    most sense as other expenses can be manged with
    the income of the person making a lesser share
    towards the loan. This would help you optimize
    the benefits from the tax exemption on principal
    and interest repaid.

So taking a joint home loan has the significant
twin benefit of increasing your loan eligibility
and maximizing your tax rebate. There is one rule
banks insist on when you apply for a joint home
loan, which is that all co-owners of the property
should also be co-applicants but the reverse need
not be true.
Increased Loan Amount Eligibility
  • If more than one person takes a house loan then
    income of all the co-owners will be considered by
    the lenders. This can help increase the size of
    the loan. In this case, the bank combines the
    incomes of both the applicants, and thus, can
    sanction a proportionately higher loan amount.
    Buying a house jointly facilitates a larger loan
    as income of all the co-owners would be
    considered by the lenders.
  • Additional benefits
  • In many states, a lower property registration fee
    is levied in case the property is owned by women
    either individually or jointly.

Disadvantage of a home loan in joint names
  • 1. If you buy another house in future then as
    per Income Tax Act if a person has more than one
    house in his name, one of them will be treated as
    self-occupied, and another will be treated as
    let-out even if it is not actually let out on
    rent. You would need to pay income tax on the
    rent received if this second house is actually
    rented out. But if it is not rented out, it is
    deemed as rented out, and you would have to pay
    income tax on an amount that you would have
    received as rent as per prevailing market rates.
  • 2. You have to pay wealth tax on one of your
    house. As per Wealth tax Act only one house is
    exempt from Wealth Tax. You have to pay tax on
    one of the house of your choice but you can
    deduct loan amount against the house for which
    you taken loan while calculating taxable wealth.
  • Source http//

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