Joint loan borrower vs sole borrower

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Ak

25 Points Joined December 2016

Hello There, We are another working salaried couple in bangalore. My wife comes in 20% tax bracket and i comes in 10% bracket(almost touching 20% IT bracket) And going to buy our first property worth 33L. Doing upfront 20% down payment and availing 80% home loan from SBI. Our goal is to obviously save income tax and also create another source of income by letting out this property. Queries/doubts are : 1. Will that be beneficial for us to make her sole owner and sole loan amount borrower for property? Taking into consideration that i will not be able to save tax. OR should we both become partly owners and borrowers to avail the maximum benefits? In case of joint home loans, as per my analysis we will not be much beneficial because loan amount is 26Lakhs (apprx.) which makes interest of 2,40,500 Rs p.a @ 9.25% and which is definitely going to fall in coming months. However, her taxable income is much more than that. And also only 4 months are left in this FY 2016-17. 2. If we let out the property, and income comes from rent annually aprx. 2,40,000 Rs. Then how we can exempt tax on this to maximize the benefits for both of us. 3. After letting out property, can we claim HRA simultaneously while paying home loan? Pls advise. Regards, Reader

Replies (4)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

210838 Points Joined July 2016

1. Joint ownership has always been rewarding, As exemption u/s. 24B can be availed only upto 2.00 L in single owner, while both of joint holders can claim the same amount individually. And exemption can be claimed as per payment wise also!!

2. Take reverse case, in future, when rental income will be more than interest paid, it will be added up in single owners higher slab rate, if you are not co-owner.

3. Yes, HRA and interest over home loan are independent of each other, and can be claimed simultaneously.

Ak

25 Points Joined December 2016

Thanks a lot for your prompt response Sir.

I understood the benefits in joint ownership, however i have a point that if this house we take in my spouse's name and another property few years later when we will buy, will take on my name. So that each one will have one property and can show as self-occupied (but obvious we will let out one of the property), for which there will not be any tax. Otherwise i believe if we become co-owners in both properties then we cannot show both as self occupied.

Pls correct me if i am thinking short and missing out any key inormation and help me to decide if this could be beneficial or joint ownership.

Regards,

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

210838 Points Joined July 2016

"but obvious we will.............." Not good idea.

1. Usually tenant will require Rent agreement, and if he takes HRA, your PAN details will reflect in the mirror of the department. Many more options there, to trap you in net.

2. When you are just in 10% bracket, why not pay tax and enjoy the legitimacy.

But otherwise, not bad planning.