Numerous individuals and families in India appreciate the goal of possessing a residence. However, due to rising real estate costs, owning a home frequently demands financial assistance in the form of a home loan. To encourage and enable homeownership, the Indian government provides a variety of tax incentives geared specifically for home loans. These incentives are intended to encourage individuals and families to pursue their homeownership dreams by lowering their tax burden.

Taking out a home loan not only allows you to realize your dream of owning a home, but it also qualifies you for specific tax breaks under the Income Tax Act of 1961. These benefits can reduce your taxable income and, as a result, the amount of tax you must pay also refer to the new income tax slabs for the current financial year. The primary goal of these tax breaks is to encourage individuals to buy homes and grow the real estate business.

Individuals who have taken out a joint home loan can benefit from a significant income tax break, including a rebate on both the principal and interest amounts repaid. Now, let’s look at the most recent changes to these tax breaks:

Principal Repayment (Section 80C):

You can claim a deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act for repaying the principal amount of your house loan. This deduction applies to both single and joint mortgages. It’s vital to remember that if you sell the property within five years of taking possession, the deduction will be applied back to your taxable income in the year of sale.

Interest Payment (Section 24):

Section 24(b) of the Income Tax Act allows homeowners to deduct the interest paid on their house loan. The maximum annual deduction for self-occupied dwellings is Rs. 2 lakh. In the case of a combined house loan, each co-applicant can claim this deduction individually, as long as they are also co-owners of the property. Remember that this deduction only applies to residential properties and the property must be finished within five years after the end of the fiscal year in which the loan was received.

Benefits of Joint Home Loans:

When you opt for a joint home loan, co-applicants can individually claim tax benefits based on their respective share in the loan and property ownership. To illustrate, if two individuals take a joint home loan with equal ownership, each person can claim deductions up to Rs. 1.5 lakhs under Section 80C and up to Rs. 2 lakhs under Section 24(b). This allows both applicants to maximize their tax benefits while sharing the loan responsibility.

Stamp Duty and Registration Charges:

Section 80EEA added a new deduction of up to Rs. 1.5 lakh for interest paid on house loans approved for affordable housing between April 1, 2019, and March 31, 2023. This discount is available to first-time homebuyers who purchase residences worth up to Rs. 45 lakhs. Furthermore, this deduction is in addition to the existing deductions available under Sections 24(b) and 80C.

In conclusion, opting for a joint home loan allows you to share the financial burden and enjoy income tax benefits. Recent updates in tax regulations have made joint home loans more advantageous. To maximize these benefits, seek guidance from a tax professional, maintain necessary documents, and follow proper procedures. By leveraging these benefits, you can reduce your tax liability and make homeownership more affordable, achieving both your dream of owning a home and the financial advantages that accompany it.