• You must be a co-owner in the property– To be able to claim tax benefits for a home loan, you must be an owner in the property. Many a time, a loan is taken jointly, but the borrower is not an owner as per the property documents. In such a case you may not be able to claim tax benefits.
• You must be a co-borrower for the loan –Besides being an owner, you must also be an applicant as per the loan documents. Owners who are not borrowers and do not contribute to the EMI shall be devoid of the tax benefits.
• The construction of the property must be complete – Tax benefits on a house property can only be claimed, starting the financial year in which construction of the property is complete. Tax benefits are not available for an under construction property. However, any expenses prior to completion are claimed in five equal instalments starting the year in which construction is complete.

When these conditions are met, the following tax benefits can be claimed  –

• For a self-occupied property – Each co-owner, who is also a co-applicant in the loan, can claim a maximum deduction Rs 2,00,000 for interest on the home loan in their Income Tax Return. The total interest paid on the loan is allocated to the owners in the ratio of their ownership. Each owner/borrower can claim interest benefit up to a maximum of Rs 2,00,000. Goes without saying, the total interest claimed by the owners/borrowers cannot exceed the total interest paid for the loan. Let’s understand Rahul and his father bought a house on loan and paid Rs 4,50,000 in interest. They have a 50:50 share in the property. Rahul can claim Rs 2,00,000 in his tax return, his father can also claim Rs 2,00,000.
• For a rented property – In the budget 2017, the interest that can be claimed as a deduction in case of rented property is  restricted to the amount to which loss from such house property does not exceed Rs 2 lakhs.To understand more on this , read Tax benefits on home loan for rented .
• Each co-owner, can claim a deduction of maximum Rs 1,50,000 towards repayment of principal under section 80C. This is within the overall limit of Rs 1,50,000 of Section 80C.

Therefore, as a family, you will be able to take a larger tax benefit against the interest paid on the home loan when the property is jointly owned and your interest outgo is more than Rs 2,00,000 per annum.

There may be a situation where you are paying the entire loan instalment and the co-borrower is not contributing any payments. In such a case, you may claim the entire interest as a deduction in your Income Tax Return.

Stamp duty and registration charges of a property can also be claimed by the joint owners. We have a detailed guide to help you maximize your tax benefits when you are the owner of a house property.