As per the Income Tax Act, 1961, every Indian borrower can avail home loan tax benefits of up to Rs.1.5 lakh annually on the principal amount repaid for their housing loan. It is vital that borrowers claim such exemptions and reduce their financial burden accordingly. Joint home loan borrowers can claim these tax exemptions individually.
How can a co-owner make the most of tax benefits?
As per Section 80C of the Income Tax Act, each co-applicant can avail tax exemptions of Rs.1.5 lakh increasing the possibility of total tax exemptions up to Rs.3 lakh on the taxable income cumulatively for both applicants. However, they should be equal contributors to the home loan EMIs to avail the benefits such.
Conditions to avail tax benefits by co-owners
Only co-borrowers who are contributing to the repayment of loan can avail the tax benefits.
The property for which the loan has been availed must have finished the construction process since there is no provision of tax benefits for under-construction property.
Section 80C allows exemption for the amount paid as part of principal amount. Further, individuals can claim tax benefits of up to Rs.2 lakh for the interest paid as per Section 24. Further, first-time home buyers can avail added tax benefits for their property. Co-applicants must know about these sections and tax exemptions to get the most out of the credit scheme and optimise their home buying experience.