How to Apply for Tax Credit on Regular Home Loans
While many home buyers choose home loans to improve their eligibility for a loan, loan repayments and tax credits for these loans must be done through a specific relationship. Let’s explain…
Flats for rent in kharghar, Tax law allows you to take advantage of several benefits when it comes to complying with the terms of a home loan. Benefits are available under section 24 (b) for interest paid and section 80C for principal repayments subject to certain conditions.
Couples usually choose a joint home loan because it can improve their eligibility for a home loan. However, there is a lot of confusion as to who can qualify for a home loan benefit and the amount of tax benefit that may be required in connection with joint home loans.
Co-borrowers vs co-owners
Section 26 of the Income Tax Act provides clear instructions on how to tax your share of joint ownership. In the case of joint ownership of a home, you, as an individual, tax your share of the property. Consequently, if your share of the joint ownership is reliable or verifiable, you cannot be taxed as an individual (BOI) or association of persons (AOP).
A key condition for applying for tax credits is that you must be a co-owner of the loan as well as a co-owner of the property. If you do not meet this basic condition, you will not be able to benefit from mortgage tax credits. In some cases, a person simply joins another close family member (father, child, or spouse) to improve their eligibility for the loan amount without having any share of the purchased property.
In such cases, a co-borrower who is not a co-owner of the property cannot qualify for tax breaks on these mortgages. This is one of the reasons why you should purchase a property under a generic name and then claim tax credits individually.
Tax relief complaint rate
It may also happen that you are a co-owner or co-borrower, but do not take on a loan service. In such a situation, you cannot qualify for the home loan tax credits, as tax credits are available depending on the amount you paid.
For independent properties, you can claim interest payments of up to 2 lakhs for each of the co-owners. To pay off a home loan, any co-borrower can claim tax credits under Section 80C, up to 1.50 lakh per year, and other eligible items. This way, you get the tax benefits of your mortgage in the same proportion as you manage the mortgage.Determine your share of the home loan
Your share of the property is fixed at the time you buy the property. This can be a down payment, as well as your mortgage share. There may also be times when you are a co-owner of a property or a co-borrower in a home loan application, although you may have paid your full share of the property along with the down payment.
Your share of the property cannot be identified in the home purchase agreement, and your share of the home loan cannot be listed on the loan authorization letter or mortgage certificate. issued by the lender. It can be assumed that the ownership shares in the house are equal unless there are other circumstances to justify the opposite.
The share of the loan can be determined by the payments of each of the co-owners. It is always recommended to prepare a memorandum of understanding (MoU), which does not require a stamp, to clearly define the respective shares of each of the co-owners in the property, in order to avoid any problems in the future. The details of payments made by each of the co-owners can also be specified in the memorandum of understanding.
In the event that a home loan is taken for the purchase of real estate, you can deduct the share of each borrower in the home loan from the share of ownership and payments made. Your share of the home loan does not have to be in the same proportion as your home ownership.
Since the share of the real estate loan crystallizes when the property is purchased, the mortgage must be insured according to the ratio obtained at the time of purchase. This ownership fee cannot change from year to year and remains fixed. Therefore, you cannot change the way you manage your mortgage at any time.
As most people don’t know, they resort to changes in the loan service model when one of the co-borrowers loses their job or takes a long leave due to pregnancy or school. However, this is not true.
To avoid problems with the tax authorities, you should not change your mortgage service model after it has been settled. In the event of a liquidity crisis, other co-borrowers can temporarily lend / donate money so that the mortgage servicing ratio is maintained for the duration, depending on the share of the mortgage.
Income Tax Home Loan Application Form
In order for both parties to benefit from the tax breaks, each party must provide a detailed document stating the same. This document can be requested from a bank branch in order to benefit from tax advantages.
Make sure that not all co-owners are asking for tax breaks for the same interest or principal. Taxpayers who wish to claim tax credits must obtain a Certificate of No Objection (CNP) from other members, which clearly states that they will not claim any tax credit on that specific amount. They should also indicate the percentage of interest and principal that can be used by the taxpayer claiming the deduction.
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