A joint home loan is obtained when a applicant applies for a home loan along with another individual who is usually someone known. This mostly includes spouses, parents, and siblings among others. This is usually done when the salary and/or credit score of the applicant is not enough to satisfy the eligibility criteria.
Applying jointly for a home loan not only boosts the eligibility criteria but also allows you to opt for a loan of higher value. You can also opt for joint home loan tax benefits and thereby maximizing your savings considerably.
The Income Tax Act of 1961 mandates that both the applicants of a home loan can claim tax benefits of up to Rs. 1.5 lakhs on the principal part and Rs. 2 lakhs on the interest under Section 24. These benefits have been explained further below -
Benefits Under Section 80C
According to this, both the applicant can claim deductions of up to Rs. 1.5 lakhs against repayment of the principal amount. If you want you can include other tax-saving instruments such as life insurance premiums, national savings certificate, public provident fund etc. in this tax exemption.l
However, it must be remembered that the deduction under section 80C is applicable only if the property has been fully constructed and is owned by the applicant. Thus, if you are the borrower but you do not own the property, then you cannot claim income tax benefits on the joint home loan.
Benefits Under Section 24
This section of the Income Tax Act stipulates that you are entitled to income tax exemptions of up to Rs. 2 lakhs on the interest component of the home loan. It does not matter whether the concerned property has been occupied by you or rented to somebody else. However, the condition here is that the construction of the house must have been completed within a period of 5 years from the date of sanction of the home as otherwise the tax benefits get reduced to Rs. 30000 per annum.