Tax Benefits for Co-Applicants on Home Loans

Find out how both applicants can save taxes with deductions on principal repayment and interest.
Home Loan
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2 min
07 December 2024
When you take a home loan with a co-applicant, you might wonder, "Can co-applicant claim tax benefit on home loan?" The answer is yes! Both the main applicant and the co-applicant can claim tax benefits. Let us break it down in simple terms.

What is a co-applicant?

A co-applicant is someone who applies for a home loan with you. This person can be your spouse, parent, sibling, or even a friend. Having a co-applicant can help you get a bigger home loan amount. It also means both of you share the responsibility of repaying the loan.

Tax benefits for co-applicants

Both the main applicant and the co-applicant can claim tax benefits on a home loan. Here are the main benefits:

  • Section 24: Co-applicants and co-owners can each claim a maximum deduction of up to Rs. 2 lakh on the interest portion of the home loan repayment made during the year. The total interest deduction will be divided among all co-owners based on their respective ownership share.
  • Section 80C: Co-applicants and co-owners are eligible to claim up to Rs. 1.5 lakh on the principal repayment of the home loan, subject to the loan's repayment period.
  • Section 80EE: If both co-borrowers are first-time homebuyers, they can each claim a tax deduction of up to Rs. 50,000. However, the property value must not exceed Rs. 50 lakh.

Conditions to claim tax benefits

To claim these tax benefits, you need to meet certain conditions:

  • You must co-own the property: Tax benefits can be claimed if the property is in your name and you are paying the EMIs, even if you are a joint owner.
  • You must be a co-borrower: In addition to being an owner, you need to be listed as a loan applicant in the official documents. Owners who do not contribute to the EMI payments are not eligible for tax benefits.
  • The property should be completed: Tax benefits are only available for a fully constructed property. Expenses incurred before construction completion can be claimed in five equal instalments, starting from the year the construction is completed.

How to claim tax benefits

Here are the steps to claim tax benefits as co-applicants:

1. Get a loan certificate: Ask your lender for a loan certificate. This document shows the interest and principal amounts you paid during the year.

2. Calculate your share: Determine how much each co-applicant paid. This can be based on your agreement, or the actual payments made.

3. Fill out tax forms: Use the loan certificate to fill out your tax forms. Make sure to include the interest and principal amounts you paid.

Important points to remember

  • To avail tax benefits on a joint home loan, you must be a co-owner of the property.
  • Tax benefits can only be claimed if you are also a co-borrower for the loan.
  • The home loan should be taken in the names of both co-owners.
  • The tax benefits will be divided among the co-owners.

Explore Bajaj Housing Finance Home Loan

Now that you know all about the tax benefits for co-applicants on home loans, it is time to take the next step toward making your homeownership dreams a reality. If you are looking for a home loan, explore Bajaj Housing Finance Home Loan. With competitive interest rates and flexible terms, Bajaj Housing Finance offers solutions tailored to meet your needs.

Here are some key benefits of choosing Bajaj Housing Finance Home Loan:

1. High loan amount: Secure a home loan of up to Rs. 15 crore* to bring your dream home to life.

2. Low interest rates: Enjoy interest rates starting 8.25%* p.a, and EMIs as low as Rs. 741/lakh*.

3. Quick approval: Get approved within 48 Hours* of applying – sometimes even sooner.

4. Flexible repayment tenure: Choose a repayment term of up to 32 years for comfortable EMIs.

5. Simple application: Take advantage of doorstep document collection for a smooth process.

6. Balance transfer facility: Move your existing home loan and get a top-up loan with better terms.

Whether it is your first home or an upgrade, Bajaj Housing Finance can provide a hassle-free home loan experience. Apply today and start your journey towards owning your dream home.

Frequently asked questions

How do I claim tax benefits as a co-applicant on a home loan?
To claim tax benefits as a co-applicant, ensure you are a co-owner of the property and a co-borrower on the loan. Tax benefits on both principal and interest can be claimed based on the ownership share, as long as you contribute to the EMI payments.

What are the eligibility criteria for co-applicants to claim tax benefits?
Co-applicants must be co-owners of the property and co-borrowers on the home loan. They must also contribute to repaying the loan. Tax benefits are available on both the principal and interest paid, which will be divided according to the ownership ratio between the co-applicants.

Can a non-owner co-applicant still claim tax benefits on a home loan?
No, a non-owner co-applicant cannot claim tax benefits on a home loan. To claim tax deductions, the co-applicant must also be a co-owner of the property, as tax benefits are tied to both ownership and contribution to the loan repayment.

Can co-applicants claim tax deductions if they are not residents of India?
Yes, non-resident co-applicants can claim tax deductions on a home loan, provided they fulfil the criteria of being co-owners and co-borrowers. The tax benefits are available based on their ownership share and loan repayment, irrespective of their residential status in India.

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