How does co-ownership affect home loan tax benefits?

For joint home loans taken by co-owners, the available tax benefits are apportioned based on each co-applicant's ownership percentage in the property.

The first step is to determine the ownership ratio between the co-owners as per the agreement and clearly specify it in percentages.

Once the ownership percentage is fixed, the principal and interest repayment on the home loan for each financial year is split between the co-owners based on their respective percentages.

The principal repayment made by each applicant on their share of the loan qualifies for deduction under Section 80C up to ₹1.5 lakhs.

The deduction on interest paid by each co-owner is subject to a limit of ₹2 lakhs per annum in the case of a self-occupied property. For let-out properties, each co-owner has no upper limit on interest deduction.

Therefore, the ownership percentage decides each co-applicant's share of repayment and the quantum of tax benefits. The deductions are calculated individually for each person based on eligibility under different sections.