Generally
all of us think that taking a loan to buy a residential property is not a good
idea and so, they start saving some amount from their monthly income into
recurring investment or a Systematic
Investment Plan (SIP) offered by mutual funds. But the
financial planners recommend that for acquiring a house for self use, one
should go for a housing loan
and pay EMIs in place of going for recurring investment or SIP in other
investment product.
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A payee can get income tax benefits through home loan
under two different Sections of Income Tax Act.
- Under Section 24– Deduction on interest on home loan for
self-occupied property up to Rs 2
lakh.
- Under Section 80C– Deduction on repayment of principal amount on
home loan up to Rs 1.5 lakh.
Tax Benefits under Section 24 and Section 80C: Mr. X is eligible to claim tax benefits under Section
80C for the principal repayment of the home loan and under Section 24 for
interest components. He can claim deduction up to Rs 1.5 lakh along with all other
permissible instruments like, life insurance premium, PPF, ELSS, NSC etc under
Section 80 C and up to Rs 2 lakh
under Section 24 B.
Total
deduction will be Rs 3.5 lakh
and if Mr. X is in the highest income tax
slab, he will get a income
tax benefit of Rs
1,05,000.
Income Tax Benefits on Joint Home Loan: One can avail income tax benefit on home loan
up to Rs 1.5 lakh under
Section 80C and 2 lakh under Section 24. But if you go for a joint home loan
along with your spouse in the ratio of 50:
50, then both of you can claim these benefits separately. So
the combined limit will be Rs 3 lakh
under Section 80C and 4 lakh under Section 24. This can reduce your overall
cost of loan for the family considerably.
Total
deduction will be Rs 7 lakh
and if both spouses are in the highest income tax slab, they will get a income
tax benefit of Rs 210000/-
which is just double compared to an individual home loan, although this
provision may vary from person to person.
Before
going for a joint home loan, you should mutually work out your ownership share
if you wish to optimize the income tax benefit. 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 income tax slabs are different, you need to work
out your ownership share in a manner that the spouse in the higher income tax
bracket owns a bigger share.
Please
note that it is essential to be co-owners to be eligible for income tax
benefits. The co-ownership share also plays a role in determining your
deductions.
