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Co Ownership of House

Co Ownership of House

You recently bought the property in joint name, signed property agreement jointly and also signed loan agreement and now thinking how to claim deductions for Return Filing as its co-ownership property

Co-ownership of house property is allowed as per the income tax act and the income accruing from property should be taxed in the hands of the co-owners according to their income they are able to generate from it. 

Tax deductions can be availed by husband and wife individually on both Principal payment (under section 80C) and Interest payment (under section 24) as per the following terms:

a. Co-owners who have taken joint loan can claim tax deductions in the ratio of ownership in the property.

b. Principal Repayment

  • Maximum tax deduction allowed is Rs. 1,50,000 (Rs. 2,00,000 for senior citizens) under section 80C of IT Act, subject to maximum limit of Rs. 1,50,000 across all investments under section 80C
  • Tax benefit for principal repayment is allowed only in case of a self-occupied house.
  • Each co-owner can claim deduction of Rs. 1,50,000 individually on principal repayment.

c. Interest Repayment

  • Interest repayment of home loan can be claimed under section 24 of IT Act under the head “Income from house property”.
  • In case of self-occupied property, maximum deduction allowed towards interest repayment is Rs. 2 lakhs or actual interest paid in the year, whichever is lower.
  • Each co-owner can claim deduction of upto Rs.2 lakhs individually toward interest repayment.
  • In case, you have rented out your house, you can claim deduction on entire interest amount without any limit. However, you have to add rent income in your total income, in the proportion of your ownership


Example for Co Ownership

Let’s say Mr & Mrs Anil Kumar Sharma have recently purchased a Commercial complex in Hitech City, Hyderabad. Both the Wife & Husband hold 35 % & 65% of the property respectively as per the property.  They have rented it out to State bank of India for long term lease for 10 years with an rental value of Rs 50,000 per month.

At the time of return filing, the income of Rs 50,000 should be split jointly by both the wife & Husband according to their purchase agreement. So Mr Anil Sharma taxable income would be 65% * (50,000*12) i.e. Rs 3,90,000 and Mrs Anil Kumar Sharma share would be 35% * (50,000*12) i.e. Rs 2,10,000

As discussed earlier, both the joint owners would be allowed to claim deductions under section 24 

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