Tax Rebate on Home Loan

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  1. sunbaj

    sunbaj New Member

    I have booked a property in which myself and my wife are co-owners and co-borower. For the property we have taken a loan of 40 Lakhs. Now since me and my wifer are co-borrowers and co-owners can we independently claim tax rebate of 1 Lakhs in principal part and 2 lakhs each in Interest component as in many places I have read that if property is co-owned and loan co-borrowed we can independently claim tax rebate of 1 lakhs each for principal and 2 lakhs each for interest component.

  2. Neha Sharma

    Neha Sharma Active Member

    If you have individually paid the amount for which you intent to claim deduction - it is allowed.

    In other words, if both you and your wife have paid Rs. 1 Lakh towards Principal repayment and Rs. 2 Lakh towards Interest repayment, you can claim deduction for the same.

    1 Lakh towards Principal repayment and 2 Lakh towards Interest repayment by both of you means that in aggregate you have paid Rs. 2 Lakh towards Principal Repayment and Rs. 4 Lakh towards Interest repayment.
    DeepakDeep and sunbaj like this.
  3. Neha Sharma

    Neha Sharma Active Member

    One more thing - in the recently announced Budget, the maximum deduction allowed under Section 80C for repayment of Principal has been increased from Rs 1 Lakh to Rs. 1.5 Lakh
    sunbaj likes this.
  4. sunbaj

    sunbaj New Member

    Can parents be included as co-borrower and then co-owner and then claim the tax rebate accordingly or is it just husband and wife that can do this ?
  5. Neha Sharma

    Neha Sharma Active Member

    You can include any person as co-owner and co-borrower and then they will also get the same benefits of deduction for repayment of interest and principal.

    Any person who has taken loan for the purchase of Residential property is allowed these deductions.
  6. DeepakDeep

    DeepakDeep New Member

    Hi Neha,

    Me and my wife is planning to buy a flat in which she is a co-applicant.

    When applying for loan bank is asking for co-applicant in loan(with or without inclusion of my wife income). I want to know few things regarding this.

    1. It is wise to include my wife's income when taking loan as we both can enjoy tax rebate?
    2. How will the ratio be defined when taking tax rebate on principle and interest. e.g. if the interest paid in a year is 3lacs, will it be 1.5lacs rebate for me or 1.5lacs for my wife or this can be adjusted?
    3. Can I alone claim maximum portion of interest for tax rebate and rest leave for my wife. e.g. if the interest paid in a year is 3lacs, can I claim 2lacs(max limit) and my wife claims 1 lac?
    4. If in future, my wife opt to be a house wife then would I be able to claim tax rebate on full interest amount?

    Thanks in advance.

  7. Neha Sharma

    Neha Sharma Active Member

    1. Although in most of the cases, it is beneficial to have your wife as a co-applicant - as both of you would be able to take the benefit of tax deductions for home loan repayments.

    2. The ratio for deduction would be the same as ratio for Home Loan and the Property.

    3. You cannot take deduction to suit your income and ratio would be same as Home Loan and Property.

    4. No, you cannot claim the deduction for full amount and can only take deduction for loan which is in your name.
    DeepakDeep likes this.
  8. DeepakDeep

    DeepakDeep New Member

    Thanks for the quick reply Neha.

    I checked with bank and they say that there is no ratio defined when they give the loan statement. Also I don't see any place where I can mention the ratio in property and loan. How would I be able to know the ratio in that case?

    Will there be any liability on my wife for loan when she is just a co-applicant in loan and her income is NOT considered? Will CIBIL show that there is a joint loan on my wife?

  9. Neha Sharma

    Neha Sharma Active Member

    As per the facts shared by you above, you are buying a house with her as co-applicant and then taking a loan with her as co-applicant.

    This indicates that both of you have a 50% share.

    The share is always mentioned especially at the time of purchase of property. If it is not mentioned, it means that all co-owners have equal share.
  10. DeepakDeep

    DeepakDeep New Member

    Co-applicant is mandatory as per bank when applying for loan.

    My only concern is if she opt to be house wife after sometime then none of us will be able to take tax rebate on her 50% even though I am paying the full EMI.

    Is there any way where I can take full tax rebate when she is not working?

    I can or cannot consider her income when applying for loan if it helps the above scenario.

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