Joint Home Loan: EMI Repayment Options and Tax Benefit Rules

I bought a condominium house with my brother and took out a mortgage with a bank. The bank manager says that EMI will have to be paid through ECS from one bank account. A single interest and capital reimbursement certificate will also be issued in common name. I will transfer my share of the EMI home loan to my brother’s bank account from there the full EMI will be paid via ECS to the bank. In such a situation, can both of us, the co-owner, benefit from the advantages under the income tax laws and in what proportion?

Answer: What you are planning to do is perfectly correct and legal. This is how joint home loans are usually served. The bank will register an ECS for a joint home loan even if there is more than one joint borrower of the home loan. So, for borrowers, there are two options. Either you open a joint bank account solely for servicing the home loan and transfer your respective share in the home loan. Alternatively, a borrower can pay the EMIs from his bank account and the other co-borrowers transfer their respective shares in the EMIs to this bank account. So since you will transfer your share in the EMI to your brother’s bank account, you will be able to claim the tax benefits without any problem.

Although the lender issues a single certificate for the payment of interest and the repayment of the principal amount of a joint mortgage mentioning the names of all the co-borrowers because the bank would not know the respective shares of the co-borrowers in the loan immovable. Even if the bank issues a single certificate for an EMI of solidarity mortgage loan, the co-borrowers can claim the tax benefit under the mortgage loan up to their respective shares in the mortgage loan provided that the co-borrower is also co-borrower. owner of the property.

Attention, it is not necessary that the respective shares of the co-owners in the property and in the mortgage are the same. It can vary because a co-owner can finance his share in the property from his own sources while the other co-owner finances it through the mortgage and undertakes to service the mortgage alone. In such a situation, he alone would be able to claim the tax benefits for the home loan because he alone would service the home loan. Be careful, the respective share of the co-owners in the property and the mortgage is crystallized at the start and cannot be modified thereafter.

Balwant Jain is a tax and investment expert and can be reached on [email protected] and @jainbalwant on Twitter.

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