Joint home loans are becoming increasingly popular among Indian couples, offering a powerful tax-saving tool in addition to shared homeownership. Investing in a house is a significant financial commitment that fosters wealth growth and provides security. By opting for a joint home loan, couples can optimize their financial strategy, according to CA Niyati Shah, Vertical Head - Personal Tax at 1 Finance.

A joint home loan, typically taken by spouses, presents several key advantages. It enhances loan eligibility by combining incomes, facilitates shared EMI responsibility for smoother finances, and provides substantial tax benefits as both borrowers can claim deductions. Women borrowers may also benefit from lower interest rates and reduced stamp duty in certain states, further enhancing cost-effectiveness.

Shah emphasized that if both co-applicants are also co-owners of the property and contribute to loan repayment, each is eligible to claim deductions on both interest and principal repayment. "Each co-applicant can claim up to Rs 2 lakh annually on interest payments under Section 24(b), and up to Rs 1.5 lakh under Section 80C for principal repayment. Together, this can amount to a total tax deduction of up to Rs 7 lakh annually," she explained.

Regarding the Deduction on Principal Repayment (Section 80C), each borrower can claim up to Rs 1.5 lakh annually on the principal repaid, regardless of whether the property is self-occupied or rented, provided the loan is obtained from a recognized lender.

For the Deduction on Interest Payment (Section 24B), in the case of self-occupied properties, each co-borrower can claim up to Rs 2 lakh on interest paid. For rented properties, there is no limit on interest deduction, but the offset against other income is capped at Rs 2 lakh.

Combining these tax benefits, a couple can claim a total tax deduction of up to Rs 7 lakh per year, with each individual being able to claim Rs 3.5 lakh through Sections 80C and 24B, respectively.

This joint structure also boosts loan eligibility, as banks consider the combined income of the applicants, allowing couples to access higher loan amounts, which is particularly beneficial in metro cities with steep real estate prices. Shah noted that for dual-income households, this offers a double advantage: "It not only results in significant yearly tax savings but also promotes long-term financial collaboration between partners."

First-time homebuyers may also be entitled to additional benefits under Section 80EE or 80EEA, provided they meet the specified conditions. "In today’s dynamic financial landscape, a joint home loan is more than just a tax-saving tool — it’s a smart, future-focused approach to wealth creation, financial equality, and shared success," Shah added.

Important points to note regarding joint home loans include that they are permitted only where the property funded by the loan is also held jointly. Banks and housing finance institutions allow joint home loans only if all loan applicants are also co-owners of the property being financed, ensuring each borrower has a legal stake in the asset. For instance, a husband and wife can take a joint loan if both their names are on the sale deed or property registration documents.

EMIs to repay the loan should be made by the joint holders, with each co-applicant being equally responsible for repayment. While one person can choose to pay the entire EMI, lenders expect all holders to be equally liable. In case of default, the lender can recover the full EMI from any or all of the joint borrowers, irrespective of individual contributions.

Each co-borrower in a joint home loan can claim tax deductions separately based on their actual contribution towards loan repayment, with up to Rs 2 lakh per year under Section 24(b) for interest paid and up to Rs 1.5 lakh per year under Section 80C for principal repayment. This is allowed only if the person claiming the benefit is also a co-owner and co-borrower, and has actually paid the amount being claimed.

To streamline EMI contributions and tax claims, joint borrowers can prepare a written agreement indicating the percentage of ownership in the property and the intended share of EMI repayments. Repayment of the loan can be in any proportion as agreed between joint holders, not necessarily identical to the proportional holding in the property itself.

Even if property ownership is divided equally (e.g., 50:50), the EMI contribution can differ depending on mutual understanding. For example, if one co-borrower earns more, they may choose to pay 70% of the EMI, even if both hold an equal share in the property. This arrangement should ideally be documented, especially if both borrowers wish to claim tax benefits in proportion to their contributions.

For ease of tracking, tax documentation, and banking procedures, it is advised that EMIs be routed from an account where one of the joint borrowers is the primary holder. This avoids complications in identifying the actual contributor and helps in smooth processing of tax claims. It is not necessary for both holders to operate a joint bank account, but EMI payments should clearly establish the connection with a loan applicant.