Applying for a joint home loan is a great tip to maximise tax benefits. When two applicants apply for a home loan together, the joint home loan tax benefits are double that of a normal home loan. Here is an overview of these tax deductions in detail.
What are the best ways to get the most tax benefits out of a joint home loan?
Several sections of the Income Tax Act of India provide tax benefits on home loans. Some of the best ways by which the applicants of a joint home loan can maximise tax benefits are as follows:
- Section 80C
According to Section 80C of the Income Tax Act 1961, the borrowers of a joint home loan can claim deduction on repayment of principal. The maximum deduction allowed here is up to Rs.1.5 lakh in a financial year for each applicant. Hence, the joint home loan tax benefits they can claim are up to Rs.3 lakh, which is double of the benefit amount for a single person.
- Section 24
Joint home loan borrowers can claim tax deduction of up to Rs.2 lakh each under this section of the Income Tax Act 1961. It is usually available on the total interest amount paid during a financial year. Hence, they can enjoy up to Rs.4 lakh as tax deductions. However, it is only applicable if the construction is completed within 5 years. If this given time is exceeded, then a claim up to Rs.30000 will be applicable.
- Section 80EEA
The Section 80EEA provides tax deductions to residential properties that are available at an affordable rate. A house has to be under Rs.45 lakh, with an area less than 645 sq. ft. (in metro cities) or 968 sq. ft. (in other cities) to claim this tax benefit. In addition, it is only given to first time home buyers.
Here, one can avail up to Rs.1.5 lakh deduction on interest payments during a financial year. This acts as an add-on to the Rs.2 lakh deductions available under Section 24 of income tax. Hence, each borrower of this joint home loan can avail up to Rs.3.5 lakh deductions in total.
What is the process to apply for a joint home loan?
After getting to know about the tax benefits of a joint home loan, it is time to apply here. The simple steps applicants need to follow are given below:
Step 1: Visit the online portal having the joint home loan application process.
Step 2: Open the application form and start filling in the basic details of both applicants.
Step 3: Generate an OTP via mobile number or email for verification purposes.
Step 4: Enter the required loan amount, tenor, and rate of interest.
Step 5: Submit the joint home loan application form.
Step 6: Wait for approval and for the entire loan amount to get disbursed.
What are the interest rates available to apply for a joint home loan?
The interest rates at which co-borrowers of a joint home loan can apply are as follows:
- Salaried individuals: 8.7% to 14%
- Self-employed individuals: 9.10 to 14%
The joint home loan tax benefits are double that of a general one. Hence, the co-borrowers investing in a house can enjoy double deductions from their total family income. Moreover, there are other benefits like lower burdens on loan repayment, availability of loans at lower interest rates, etc. Therefore, getting a joint home loan is always more beneficial than a general home loan.
