You can’t only be a co-owner of the property; you are also the co-borrower for the loan. That is: when a property is owned jointly by two or more parties, all co-owners enjoy the tax benefits on loan together.
Let’s find out in this article, what the tax benefits on the Home Loan for joint owners are, how you can claim these benefits, and how the budget 2019 may affect all this.
If the property is occupied by the co-owners (who are also co-borrowers of the loan), all of them can claim a maximum of Rs 2,00,000 as a tax benefit, but there’s a catch. The total amount claimed by all the owners cannot exceed the total amount of interest paid by them. This is obvious but still needs to be reminded. So, you and your partner, say your wife, co-owns a property and have co-borrowed an SBI Home Loan that has a total of Rs 5,00,000 in interest, both of you can claim your Rs 2,00,000 as a tax benefit.
If the property is a rented one, you can claim the benefit as a deduction in the interest, which should not amount to more than Rs 2,00,000.
When it comes to the principal amount of the Home Loan co-borrowed by the co-owners, each owner could claim a deduction of no more than Rs 1,50,000. This is in accordance with the limit set under section 80C.
Considering these benefits for co-owners, it would be wise to suggest that a family co-owning a property should also be co-borrowers of the Home Loan to avail the full tax benefits and it is also worth noting that if the interest total is more than Rs 2,00,000 it would be a wise way to dodge a huge amount of interest.
To avail these benefits, as mentioned above, you should be co-owners of the property and also be the co-borrowers of the loan but what happens when you satisfy both these conditions but are not servicing the loan?
Well, you don’t get to claim any tax benefits. You see the amount of tax benefit you can claim is directly proportional to the percentage of share in the servicing of the loan.
So, if you don’t service the loan, your share is nil, which means the amount you could claim from the interest or the principal amount, amounts to nil. It is the time to be reminded that you need to be servicing a share in the loan if you want to claim the above-stated benefits.
The proposed Union Budget 2019 has affected Home Loans directly. Things have changed only for the better. Earlier if the co-borrowers of the loan, who are also the co-owners, had more than one property, only one can be claimed as self-occupied, and the other went out as the let out. This meant that things like gross annual value would interfere and you would have to pay an extra, say Rs. 1,55,000 for the next 4-5 years, which is, without doubt, a problem.
Please note that these are the policies which are still active, but if the budget of 2019 does come into play in the coming times, both of the properties could be claimed as self-occupied and the extra payment which is required for the coming years would not be accounted to. It could, without doubt, be a relief to a lot of people who have borne the brunt of high interest due to ownership of more than one property.
Keeping all these things in mind, there are key takeaways for everyone here. So let’s conclude the takeaway. If you are buying a new house or any other property, you ought to make sure that you are sharing the ownership with someone else, perhaps someone in the family. If you are borrowing a loan like the PNB Home Loan, make sure you have a co-borrower who is also servicing the loan with you in a share which proves to be profitable for both of you.
There are a lot of other things you could do to stay ahead of the tax game, but you need to be constantly updated on the financial matters of India, in order to do so. Things are always changing in a growing economy like India, and although things like Home Loans do not go unnoticed if a new change comes around the corner.It’s always healthy to be aware, so when you are told of a new update you aren’t surprised.
If you know information, you won’t be buried in a lot of troubles when the repayment of loans come around and you could plan your ‘dream’ holiday, without any hassle. Just be aware of the guidelines and be updated with the important stuff, especially if you plan to borrow a loan, either an SBI Home Loan or a PNB Home Loan in the near future. Stay healthy financially with a sound knowledge of interest rates and tax claims. If you do happen to have questions regarding the loans and its policies, you can always ask a financial expert. Being financially wise means you are money wise. Enjoy the riches in the years to come.
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