Best Possible Ways to Avail Tax Benefits on a Joint Home Loan

Buying a home is a significant milestone in most people’s lives. Investing in your dream home is undoubtedly a good investment as it inculcates a sense of stability and security. Unfortunately, the exponentially growing demand for real estate has raised home prices. Today, a large percentage of the population can’t afford to purchase a home from their savings alone. They have to rely on external financial aid or Joint Home Loan to complete their purchase.

The modern-age lending institutions like NBFCs are helping ordinary people to buy their dream homes through affordable home loans. And it is a known fact that joint home loan tax benefits are one of the most advantageous incentives available for taxpayers planning to buy a home.

Read on to learn more about home loans and the tax benefits it has to offer.

What is a joint home loan?

A joint home loan is a type of home loan with more than one borrower, and all the borrowers have an equal repayment responsibility.

Joint home loans are availed with co-applicant(s) to improve the eligibility for a higher loan amount. One of the borrowers is classified as the primary borrower, and others are included in the co-borrower(s) category. The co-applicants for a home loan are usually close family members such as spouses, children, parents, siblings, etc. Just remember – if the property has multiple owners, all owners should be co-borrowers. Most lenders do not allow more than 3 people to take a joint home loan.

Joint home loans make it easier to get the loan approved and are offered better terms, including lower interest rates, discounts on fees and charges, higher loan amounts, etc. One can easily apply for a housing loan online via their chosen lender’s website.

Eligibility criteria for joint home loans

The eligibility criteria for joint home loans are minimum requirements set by the lending party to judge the loan application. It helps them reduce their risk by filtering out unwanted applicants. Different lenders have varied eligibility criteria. However, most of it is pretty similar. Let’s take a quick dive into the eligibility criteria for home loans set by the lender.

  • The loan applicants must be Indian citizens
  • As per the minimum age criteria, applicants should be older than 21 years but less than 60 years by the time of loan maturity
  • Salaried applicants should have a minimum work experience of 1 year with at least 6 months in the current organisation
  • The number of co-applicants should not be more than 3
  • Co-applicants must be close family members, including child, parents, spouse, siblings, etc.
  • The minimum monthly income should not be less than INR 20,000 (for non-metro cities), and it should not be lower than INR 25,000 (for metro cities)

In addition to the above eligibility criteria, submit the required documents, including KYC docs, proof of income, bank statements, property-related documents, etc. It is important to note that the repayment of joint loans is a collective responsibility of all the co-applicants, even when they don’t own the house.

Income tax benefits of joint home loans

There are numerous joint home loan tax benefits that people are unaware of, and thus they are unable to reap the benefits. It can help reduce the tax burden for all the loan applicants to a great extent.

Some of the most prominent home loan tax benefits are mentioned below.

  • As per the second 80C of the Indian Income Tax Act, home loan borrowers can claim the principal amount of up to INR 1.5 lakhs each as tax deductions. All co-borrowers have this benefit. For example, if a father and son are the co-borrowers in a joint home loan and the principal amount repaid within a particular year is INR 2 Lakhs, both can claim INR 1 Lakh as a tax deduction.
  • As per section 24 of the Indian Income Tax Act, interest charges of up to INR 2 Lakhs (for self-occupied residence) can be claimed as tax deductions. However, there is no upper limit on the maximum interest charges claimed as tax deductions for let-out properties.

Important things to know about joint home loan tax benefits

There are multiple benefits of taking a home loan to reduce tax obligations. However, to avail of income tax benefits on a joint home loan, the co-borrowers also have to be co-owners of the property. If you are merely a borrower and not an owner, you won’t be able to claim these benefits. Another important thing of note is that these benefits can only be claimed in the proportion of the ownership of the property. Therefore, homeowners need to have an ownership share agreement before entering into a joint home loan.


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