Owned House Property
(Various provisions &
benefits of owning a property jointly)
As per Section 26 of the Income Tax Act
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
Tax Benefits of Home
- Deduction upto Rs. 200000 for Interest on house loan
u/s 24 of Income Tax Act &
These benefits can be read in
- Deduction upto Rs. 150000 u/s 80C (alongwith other
tax savings like PPF, PF, LIC, ELSS etc.) for pricipal repayment of loan
To be eligible to claim all the possible benefits of jointly owned
property following points need to be taken
- 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.
When should Property Loan be jointly
- If property is given on rent, rental income will be taxed in the hands of co-owners as per their respective share.
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.