Taken joint home loan? You may need NOC from joint owner to avail tax benefits

By: |
January 07, 2020 1:22 PM

You may face obstacle in claiming tax deductions on interest payment and principal repayment if home loan is taken in joint names.

income tax, 80C benefits, tax benefits on home loan interest, home loan principal repayment, joint home loan, joint ownership, property registration, stamp duty on property registration, No Objection Certificate, NOCAlong with home loan interest, the principal repayment is also eligible for tax benefits.

There are additional benefits in buying homes in joint names and in taking home loans jointly. For example, both husband and wife may claim tax benefits up to Rs 2 lakh each on interest paid on home loan if the loan is taken jointly and the amount of interest paid in a year is over Rs 4 lakh. Otherwise, a single owner may avail tax deduction only up to Rs 2 lakh in a financial year even if actual interest paid is much more.

Along with interest, the principal repayment is also eligible for tax benefits up to Rs 1.5 lakh u/s 80C of the Income Tax Act. So, in case the amount of home loan principal repaid is more than Rs 1.5 lakh, joint owners may avail the additional benefits jointly provided the joint owners have taxable income and the to avail the tax benefits, the home loan EMIs are paid from a joint account held by the co-owners of the property.

Not only tax benefits, but in most states women need to pay lower stamp duty. So, by keeping a woman as joint owner, a property may be registered at a lower rate.

A property may be purchased jointly with spouse, parents and/or siblings. In fact all total six persons may buy a property jointly.

However, you may face obstacle in claiming tax deductions on interest payment and principal repayment if loan is taken in joint names.

To ensure that all the joint owners are not claiming tax benefits on same amount of interest paid or principal repaid, the members, who want to claim tax benefits, need to take No Objection Certificate (NOC) from other members stating that they will not claim any tax benefits on the specific amounts.

In the NOC, joint owners, who don’t want to avail full tax benefits, need to declare that he/she won’t avail the full tax benefits and what percentage of the interest paid and principal repaid may be availed the taxpayer, in favour of whom the NOC is given.

The amount of loan taken, name of the bank from which the loan has been taken and the amount of interest was paid and principal was repaid during the financial year need to be mentioned in the NOC, to make it clear how much tax benefits may be availed by the taxpayer.

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