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Jointly Owned House Property
(Various provisions & benefits of owning a property jointly)

As per Section 26 of the Income Tax Act if a property is owned by two or more persons and there shares are defined and ascertainable; income from such co owned property shall be taxed in the hands of co owners individually in their defined share. Important point to note here is that share of co-owners shall be clearly defined.

As income is taxed individally in the hands of each co-owner, each of them is also entitled for all the tax benefits of a house loan if the property is financed through a House Loan.

This clearly explains that owning a property jointly can reduce tax burden to a great extent.

Especially in case of double income group it is advisable that property should be purchased in joint names of husband and wife. Both husband and wife will be able to claim the tax benefits individually.

Tax Benefits of Home Loan:
  1. Deduction upto Rs. 200000 for Interest on house loan u/s 24 of Income Tax Act &
  1. Deduction upto Rs. 150000 u/s 80C (alongwith other tax savings like PPF, PF, LIC, ELSS etc.) for pricipal repayment of loan
These benefits can be read in detail here....

To be eligible to claim all the possible benefits of jointly owned property following points need to be taken care:
  • Property should be registered in joint names.
  • Share of each owner in property should be clearly defined in registration documents.
  • Loan should also be in joint name of all the owners.
  • Repayment of loan should be done by the co owners out of their incomes. 
  • If property is given on rent, rental income will be taxed in the hands of co-owners as per their respective share.
When should Property Loan be jointly owned?

Opting for joint loan is benficial when income tax benefits of loan are so high that can not be covered by claiming in a single person's return. In such scenario its better to go for a joint loan & define the share as per the capability of repayment of the co-owners. In following cases opting for joint loan shall be recommended:
  • All the co owners have taxable income to use the tax benefits of home loan and
  • Interest component on home loan is higher then the individual limit of interest deduction under Section 24 of Income Tax Act of Rs. 200000.

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