One of the most attractive features of a housing loan is that it helps in reducing your income tax liability, and thus makes it easier and cheaper to build a fixed asset. A housing loan makes you eligible for tax rebates under Section 80C and Section 24 of the income tax regulations.

A joint housing loan comes with the twin benefit of increasing the overall loan eligibility and the income tax rebate that can be claimed by both co-applicants individually under Section 80C and Section 24. The mandate in claiming the income tax rebate is that the co-applicants of the housing loan should also co-own the underlying residential property.

Who are eligible?
A joint home loan can only be availed by a minimum of two and maximum of six applicants. A borrower cannot take a joint home loan with just any person. In general, the lender defines the relationship between co-borrowers eligible to take such a loan. A joint housing loan is given to married couples or close blood relatives like parent and child.

Some banks allow brothers to take a joint home loan provided they will both be coowners of the property. Usually, banks insist that all coowners of the home must be co-borrowers in a joint home loan. Generally, friends or unmarried couples living together are not allowed to take joint housing loans.

Ownership structure

The ownership structure of the property is a very important factor in case of a joint loan. Ownership of the house makes one eligible for the tax benefits. The tax benefits are applicable in ratio of ownership in the property and therefore the ownership of property should be carefully decided keeping in mind the re-payment capacity of both the borrowers.

In case a person is just a coborrower of a loan and not a co-owner in the property, he cannot claim the tax rebates. On the other hand, if the coowners are equal owners of a property but if the share of the loan is 2:1, the tax benefits can also be availed in the same ratio. Usually, banks do not accept split EMI payments (two or more cheques for the same EMI). The EMI in joint accounts can be made through a joint account owned by coborrowers or by splitting EMIs in a financial year in the proportion of loan share.

Income tax benefits

The income tax benefits are applicable in proportion to the ownership structure. For example, if the ownership in a property is 60:40, a loan of say Rs 50 lakhs will be split as Rs 30 lakhs and Rs 20 lakhs respectively and this ratio will be applicable while calculating tax benefits on interest/principal repaid on this loan. Therefore, it is advisable for joint owners to procure an ownership sharing agreement stating the ownership proportion on a stamp paper as legal proof of the ownership.

The case for the housing loan gets stronger in case of joint applicants. Banks consider the earning potential of co-borrowers and decide on the eligibility of the loan. Therefore, the loan eligibility increases in case of joint loan account.

The joint account holders (owners of the property) can claim income tax benefits individually. The housing loan benefits that fall under Section 80C and Section 24 of Income Tax Act make each borrower eligible for a maximum deduction of Rs 1 lakh and Rs 1.5 lakhs associated to principal repayment and interest payable on the home loan respectively. For example, a husband and wife, both of whom are tax payers with independent income sources, get tax deduction benefits, with respect to the same housing loan to the extent of the amount of loan taken in their respective names. The maximum deduction in such a case would Rs 2 lakhs on the principal repayment and Rs 3 lakhs on interest payment.