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
c. Interest Repayment
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