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How to maximise tax benefits on joint housing loan

By - Magnum

For most tax-payers, the first three months of a calendar year are extremely hectic. In addition to meeting various year-end deadlines at their workplaces, they also scramble to make tax- saving investments before March 31. In the rush to meet this deadline, many forget to take into account tax breaks that they can claim even without making specific investments. For instance, tax breaks on joint home loans. Now, most home loan borrowers are aware that repayment of principal component entitles them to deduction of up to Rs 1 lakh under section 80C and section 24 allows tax benefits of up to Rs 1.5 lakh on interest paid. However, not many couples know how to maximise tax breaks on joint home loan. If you belong to the growing tribe of couples who buy properties jointly, you need to know that each of you can claim both these deductions individually, thus optimising your tax savings. Moreover, you can also mutually work out our ownership share if you wish to optimise the tax breaks. Now, lenders insist on co- owners being co-borrowers in a housing loan, while it is essential for co-borrowers to be co-owners to be eligible for tax benefits. And, the co-ownership share plays a role in determining your deductions. That is, if you and your spouse own the house jointly in the ratio of 50:50, both can claim deductions in equal proportion. Therefore, if your tax slabs are different, you need to work out your ownership share in a manner that the spouse in the higher tax bracket owns a bigger share. Finally, however, the decision will boil down to the level of mutual understanding between the couple - if it is good, they can adopt this strategy. Else, a 50:50 arrangement might be a safer bet. Better still, it might be wise to go by the partners' actual share in the loan taken or EMI paid.