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How to get tax benefit in joint ownership of property?- Property Hotline
Posted
July 14, 2016
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July 14, 2016
3,884
14
1
0.39%
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6:10Now PlayingBe Un Confused
Expert: Pannkaj Ghadiali, Managing Partner at PC Ghadiali And Co LLP.
Question: My husband and I jointly purchased a home. We are the joint owners. The interest amount on the home is `5 lakh. It is my first house and the second for my husband. How should we distribute the ownership to get maximum tax benefits?
Answer: It is not clear from your question, whether both of you have contributed towards the cost of the flat or whether either of the names has been added for convenience. For the purpose of your answer, I am assuming that both of you have equally contributed for the house. It is not known if the said house is rented or self-occupied. So there are 3 options:
In the first option, we consider that the house is rented out. The entire interest amount and municipal taxes paid are deducted from rent income and the resultant amount is divided between the two in the ratio of their holding.
In the second option, if the house is not rented and both of you are staying together in this house, it will be treated as self-occupied property in both the cases and in such a case the aggregate interest allowable will be restricted to Rs2 lacs only. This will be equally divided between the two and included in their respective return of income.
As you mentioned that your husband is having one more house, he has the option of selecting any one house as his self-occupied property. Therefore, in reality both of you could be staying in the same house but for income tax each of you could choose a different house as self-occupied property. Now let's say that the joint ownership house is called Property A and the other house owned only by your husband is called Property B. You opt that Property A is your self-occupied house and your husband claims that Property B is his self-occupied house.
Now in your case since Property A is SOP, your share of interest of Rs2.50 lakhs will be restricted to Rs2 lakhs as deduction. In case of your husband, since Property A is deemed to be let out, he can claim the entire amount of Rs2.50 lakhs as a deduction. Of course the interest paid will be deducted from the deemed rent and the balance will be considered as income/loss from the house property.
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