Home loan rates have come down. But the same cannot be said about, real estate prices. According to data provided By Jones Lang LaSalle, real estate prices have increased rapidly by as much as 30-40% (mostly in newly-launched projects) across Indian Tier I cities, even though the real estate market has been witnessing a slow down since 2009.“The real estate prices, especially in the metros, have gone through the roof. You cannot think of owning a house unless you dip into both the incomes,” says Suresh Sadagopan, Certified Financial Planner, Ladder 7 Financial Advisories. One of the ways, however, you can lower the loan burden and increase affordability by jointly shouldering the loan repayment.
1) Both should be co-owners
Just taking a join loan won’t make you eligible for tax breaks. Both of you can avail tax benefits on the home loan only if both of you are the co-owners of the property. “Co-borrowers, who are also co-owners, are eligible for tax rebate in the proportion of their share in the loan. It means you have to consider the repayment capacity of each spouse while deciding the share of the loan. So, a couple can be equal owners but if their share of the loan is in the ratio of 60:40, the tax benefits would be shared in that proportion,” says Vaibhav Sankla, Director, H&R Block India.
So, a couple can be equal owners but if their share of the loan is in the ratio of 60:40 or 70:30, the tax benefits would be shared in that proportion. Ideally an individual in the higher tax bracket should opt for a higher ratio of the loan to save on more taxes.
2) Paying EMIs
You cannot issue two cheques for servicing the same EMI even in case of a joint loan. Hence you should open a joint account or route the EMI payments from an existing joint account. The second option is to share the number of instalments. For example, eight cheques in a year could be issued from the husband’s account, while the wife could issue for the rest of the period.
3) Claiming tax benefits
The maximum tax deduction available for a single borrower is Rs 1.5 lakh. This deduction would apply to each borrower, taking the total possible deduction to Rs 3 lakh. “To claim this benefit get a break up of share of the loan on a stamp paper at the beginning itself to avoid tax complications,” says Vaibhav Sankla. Each borrower has to provide a copy of the borrower certificate to claim their respective tax relief.
The co-borrowers (you and your spouse) should enter into a simple agreement with the on Rs 100/- stamp paper. This agreement will contain the share of the ownership along with that of the home loan availed by the couple. You need two copies of the certificate from the HFC/bank and each of you can submit copies the certificates along with a copy
2) Paying EMIs
You cannot issue two cheques for servicing the same EMI even in case of a joint loan. Hence you should open a joint account or route the EMI payments from an existing joint account. The second option is to share the number of instalments. For example, eight cheques in a year could be issued from the husband’s account, while the wife could issue for the rest of the period.
3) Claiming tax benefits
The maximum tax deduction available for a single borrower is Rs 1.5 lakh. This deduction would apply to each borrower, taking the total possible deduction to Rs 3 lakh. “To claim this benefit get a break up of share of the loan on a stamp paper at the beginning itself to avoid tax complications,” says Vaibhav Sankla. Each borrower has to provide a copy of the borrower certificate to claim their respective tax relief.
The co-borrowers (you and your spouse) should enter into a simple agreement with the on Rs 100/- stamp paper. This agreement will contain the share of the ownership along with that of the home loan availed by the couple. You need two copies of the certificate from the HFC/bank and each of you can submit copies the certificates along with a copy
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