Joint Home Loan Tax Benefits for Co-Borrowers (AY 2026-27)

Buying a home jointly, typically with a spouse or a parent, is one of the most effective ways to increase the total tax deductions available on a housing loan. The logic is straightforward: when two people co-own a property and co-borrow the loan, each person claims their proportionate share of interest and principal deductions in their own ITR. Done correctly, a couple can save up to twice the tax that a single borrower would save.

Yet the rules are precise, and errors are common. Co-borrowers who are not co-owners get no deduction at all. A mismatch between the ownership ratio and the EMI payment trail invites scrutiny. And the shift to the new tax regime as the default from FY 2024-25 onward has taken away several of these deductions for taxpayers who did not opt out.

This guide covers every deduction available to joint home loan borrowers for AY 2026-27, the documents needed, and the ITR filing mechanics.

Looking for expert help with joint home loan tax benefits for co-borrowers in India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.

The Fundamental Rule: You Must Be Co-Owner AND Co-Borrower

Before any deduction calculation begins, two conditions must be met simultaneously:

1. Co-ownership of the property. Your name must appear on the sale deed or title document, with a defined share (50:50, 60:40, or any other split).
2. Co-borrower on the loan. Your name must appear on the home loan agreement as a co-borrower (not merely a guarantor).

If you are a co-borrower on the loan but do not have ownership in the property, you cannot claim any tax deduction on the EMI you pay. Similarly, if you are a co-owner but are not on the loan, you have no loan interest or principal to claim. Both conditions must exist together.

This is the single most misunderstood rule. Banks often add a family member as a co-borrower purely to strengthen the loan application (higher combined income means a larger loan amount). But unless that person is also recorded as a co-owner on the property documents, they get zero tax benefit from the arrangement.

Section 24(b): Interest Deduction for Each Co-Owner

Section 24(b) of the Income Tax Act allows a deduction for the interest payable on capital borrowed for acquiring, constructing, repairing, or reconstructing a house property. In a joint loan, each co-owner can claim this deduction on their proportionate share of interest. For the full mechanics of the Section 24(b) home loan interest deduction, including the self-occupied cap and let-out treatment, see our dedicated guide.

Self-Occupied Property

For a self-occupied property, the cap on interest deduction is Rs 2,00,000 per co-owner, per financial year, provided:

• The loan was taken on or after 1 April 1999.
• The construction or acquisition was completed within 5 years from the end of the FY in which the loan was taken. If construction exceeds 5 years, the cap drops to Rs 30,000.

Combined benefit for a couple: If both spouses are co-owners (50:50) and co-borrowers, each can claim up to Rs 2,00,000 in interest deduction. The household-level deduction effectively becomes Rs 4,00,000 per year on interest alone.

How the Split Works

The split follows the ownership ratio, not who physically makes the EMI payment from their bank account. If Ravi and Priya own a property 60:40 and the annual home loan interest is Rs 5,00,000:

• Ravi's share of interest: 60% of Rs 5,00,000 = Rs 3,00,000. He can claim Rs 2,00,000 (Section 24(b) cap for self-occupied property).
• Priya's share of interest: 40% of Rs 5,00,000 = Rs 2,00,000. She can claim the full Rs 2,00,000.
• Combined claim: Rs 4,00,000 (out of Rs 5,00,000 total interest).

Without the joint arrangement, a single borrower would cap out at Rs 2,00,000, leaving Rs 3,00,000 of interest without any tax benefit.

Pre-Construction Interest

If the property is under construction, interest paid during the pre-construction period (from the date of borrowing to the end of the financial year preceding the year of completion) is allowed as a deduction in five equal annual instalments, starting from the year of completion. Each co-owner claims their proportionate share of the pre-construction interest in five instalments, subject to the Rs 2,00,000 overall cap per year.

Section 80C: Principal Repayment Deduction per Co-Owner

Section 80C allows a deduction for the principal component of home loan EMIs, up to a maximum of Rs 1,50,000 per person, per financial year. This limit is shared with other 80C-eligible investments (PPF, ELSS, life insurance premium, tuition fees, etc.). The complete list of Section 80C deductions including principal repayment shows how the Rs 1,50,000 ceiling gets consumed across these instruments, which matters when each co-owner already has other 80C claims.

In a joint home loan, each co-owner can claim the principal repayment deduction in proportion to their ownership share. If the total principal repaid during the year is Rs 2,40,000 and ownership is 50:50, each co-owner claims Rs 1,20,000 under Section 80C (assuming sufficient headroom within the Rs 1,50,000 cap).

Important conditions:

• Section 80C principal deduction is available only under the old tax regime. Taxpayers on the new regime (the default from FY 2024-25) cannot claim it.
• The deduction is reversed if the property is sold within 5 years of possession. The amount previously claimed under Section 80C gets added back to income in the year of sale.
• Stamp duty and registration charges paid at the time of purchase also qualify under Section 80C, and each co-owner can claim their proportionate share.

Sections 80EE and 80EEA: Additional Interest Deductions for First-Time Buyers

These two sections provide extra interest deductions over and above the Rs 2,00,000 available under Section 24(b). They apply to first-time homebuyers who meet specific eligibility criteria.

Section 80EE: Rs 50,000 Additional Interest

Section 80EE provides an additional deduction of up to Rs 50,000 per year on home loan interest for first-time homebuyers, over and above the Section 24(b) limit. Eligibility conditions:

• The loan was sanctioned between 1 April 2016 and 31 March 2017.
• The stamp duty value of the property does not exceed Rs 50 lakh.
• The loan amount does not exceed Rs 35 lakh.
• The taxpayer does not own any other residential property on the date of loan sanction.

Since the loan sanction window closed on 31 March 2017, no new loans qualify. However, taxpayers who took eligible loans during that window can continue to claim the Rs 50,000 deduction each year until the loan is fully repaid, as there is no sunset clause on the deduction itself, only on the loan sanction date.

Joint loan applicability: Each co-owner who individually meets the eligibility criteria can claim the Rs 50,000 deduction separately.

Section 80EEA: Rs 1,50,000 Additional Interest

Section 80EEA provides a deduction of up to Rs 1,50,000 per year on home loan interest, in addition to Section 24(b). Eligibility conditions:

• The loan was sanctioned between 1 April 2019 and 31 March 2022.
• The stamp duty value of the property does not exceed Rs 45 lakh.
• The taxpayer does not own any other residential property on the date of loan sanction.

Like Section 80EE, the sanction window has closed. Eligible borrowers who took loans during this period continue to claim the deduction annually until the loan tenure ends.

Both 80EE and 80EEA are available only under the old tax regime. Taxpayers on the new regime forfeit these deductions entirely.

Combined Maximum Under Old Regime

For a co-owner who qualifies for all applicable sections on a self-occupied property:

Note: 80EE and 80EEA cannot be claimed simultaneously by the same person for the same property. If the loan falls in the 80EEA window (2019 to 2022), Section 80EEA applies. Section 80EE applies only for loans sanctioned in the 2016-17 window.

For a couple with 50:50 ownership, both co-owners claiming Section 24(b) and Section 80C together yields a combined deduction of up to Rs 7,00,000 per year (Rs 4,00,000 interest plus Rs 3,00,000 principal).

New Tax Regime: What Joint Borrowers Lose

The new tax regime, which became the default option from FY 2024-25, strips out most home loan deductions for self-occupied property:

For self-occupied property under the new regime, co-borrowers effectively get zero home loan deduction. The only exception is a property that is let out, where the full interest continues to be deductible under both regimes.

This makes the regime choice critical for joint borrowers. A couple with a Rs 4,00,000 annual interest outflow on a self-occupied flat may save Rs 1,20,000 to Rs 1,60,000 in tax (depending on slab rates) by staying on the old regime. Each co-borrower should independently evaluate whether the old or new regime results in lower tax liability, factoring in all deductions (not just home loan). If the comparison is not clear-cut, our ITR filing service computes both regimes side by side for each co-owner before the return is filed.

Note: Once you opt into the old regime for a financial year (by filing Form 10-IEA before the ITR due date), you must stay on it for that year. Salaried taxpayers can switch each year; business/profession taxpayers who opt out of the new regime can switch back only once.

Let-Out Property: Full Interest Deduction Under Both Regimes

When a jointly owned property is let out, the rules change materially:

1. No Rs 2,00,000 cap on interest. The entire interest paid during the year is deductible against rental income under Section 24(b). Each co-owner deducts their proportionate share of interest against their proportionate share of rental income.

2. Available under both old and new regimes. Unlike self-occupied property, let-out property interest deduction is not restricted under the new regime.

3. Loss set-off cap. If the interest exceeds the rental income (after the 30% standard deduction), the resulting house property loss can be set off against other income only up to Rs 2,00,000 per person per year. The unabsorbed loss is carried forward for 8 assessment years and set off only against future house property income.

Example

Ankit and Megha co-own a let-out flat in Hyderabad (50:50). Annual rent received: Rs 4,80,000. Annual home loan interest: Rs 6,00,000.

Each co-owner's computation:

• Share of rent: Rs 2,40,000
• Less 30% standard deduction: Rs 72,000
• Net Annual Value per co-owner: Rs 1,68,000
• Less Section 24(b) interest (50% of Rs 6,00,000): Rs 3,00,000
• House property income per co-owner: Rs 1,68,000 minus Rs 3,00,000 = loss of Rs 1,32,000

Each co-owner sets off this Rs 1,32,000 loss against salary or other income. Since the loss is under Rs 2,00,000, the full amount is absorbed in the current year. No carry-forward is needed.

Getting the Ownership and Repayment Ratio Right

The Income Tax Department can question a mismatch between the ownership share and the actual EMI payment pattern. If the property is owned 50:50 but only one co-owner is paying the entire EMI from their bank account, the department may disallow the non-paying co-owner's deduction claim.

Best practices:

• Match the ownership ratio to the loan repayment ratio. If ownership is 60:40, each co-owner should ideally pay 60% and 40% of the EMI respectively.
• Pay from separate bank accounts. The strongest evidence is EMI debits or transfers from each co-owner's individual bank account. A joint bank account works if the co-owners can demonstrate proportionate contributions.
• Maintain a clear paper trail. If Co-Owner A transfers their share to Co-Owner B's account (from which the EMI is debited), the transfer amounts should align with the ownership ratio.
• Document the ownership split in the co-ownership agreement or sale deed. A registered document stating the ownership percentage eliminates ambiguity.

A common scenario is when one spouse earns significantly more than the other. The higher-earning spouse may want to claim 100% of the deduction. But if the property is registered 50:50, they can claim only 50%. The ownership ratio must be decided at the time of purchase, and changing it later involves a transfer (with stamp duty and potential capital gains implications).

Worked Example: How a Couple Maximizes Deductions

Scenario: Vikram and Anjali, both salaried, buy a self-occupied flat in Hyderabad for Rs 80 lakh in FY 2023-24. They take a joint home loan of Rs 60 lakh. The property is registered 50:50.

Loan details for FY 2025-26:

• Annual interest paid: Rs 4,80,000
• Annual principal repaid: Rs 1,80,000
• Loan sanctioned in 2023, so Section 80EE does not apply (sanction window was 2016-17). Section 80EEA does not apply either (sanction window was 2019 to 2022, and stamp value exceeds Rs 45 lakh).

Both choose the old tax regime.

Vikram's Deductions

Anjali's Deductions

Combined Household Benefit

• Total deductions claimed: Rs 2,90,000 + Rs 2,90,000 = Rs 5,80,000
• If Vikram alone had owned the property and taken the loan, his maximum Section 24(b) claim would be Rs 2,00,000 and Section 80C would be Rs 1,50,000 (assuming full 80C headroom). Total: Rs 3,50,000.
• Additional deduction through joint ownership: Rs 2,30,000 per year.

At a combined marginal tax rate of 30% (plus cess), the additional tax saving is approximately Rs 71,300 per year.

Documents Required to Claim Joint Home Loan Benefits

Keep these documents ready when filing your ITR or responding to a notice:

1. Sale deed or title deed showing co-ownership and the ownership ratio.
2. Home loan sanction letter with both co-borrowers' names.
3. Loan account statement from the bank, showing the co-borrower names and the annual breakup of principal and interest.
4. Interest certificate (provisional or final) issued by the bank for the relevant financial year.
5. EMI payment proof from each co-owner's bank account (bank statements showing EMI debits or transfers).
6. Co-ownership agreement (if separate from the sale deed), documenting the share split.
7. Form 12BB (for salaried employees claiming through employer for TDS adjustment).
8. Possession certificate or occupancy certificate confirming the date of completion (relevant for the 5-year construction rule under Section 24(b) and for pre-construction interest).

If the property is let out, you will also need the rental agreement and proof of rent received (bank credits).

How to File ITR as a Joint Home Loan Co-Owner

Each co-owner files their own ITR and reports their proportionate share of income and deductions. There is no joint filing in India, so a couple ends up with two returns to prepare. Tax Garden's ITR filing plans with transparent pricing cover both co-borrowers' returns and keep the interest and principal split consistent across them.

Step 1: Choose the Right ITR Form

• ITR-1 (Sahaj): If the co-owner has salary income, one house property (not loss carry-forward), and total income up to Rs 50 lakh.
• ITR-2: If the co-owner has capital gains, more than one house property, or income above Rs 50 lakh. Also required if claiming loss carry-forward from house property.

Step 2: Fill Schedule HP (House Property)

In Schedule HP, each co-owner reports:

• Type of property (self-occupied, let-out, or deemed let-out).
• Their share of rental income (for let-out property) or nil (for self-occupied).
• Their share of municipal taxes paid.
• 30% standard deduction (auto-computed for let-out).
• Their share of interest under Section 24(b).
• The name and PAN of the other co-owner(s).

The result is the co-owner's individual income or loss from house property.

Step 3: Claim Deductions Under Chapter VIA

• Section 80C: Enter the principal repayment amount (your share) under the 80C line in Schedule VIA.
• Section 80EE or 80EEA: Enter the additional interest amount, if eligible, under the respective line.

Step 4: Verify Against AIS and Form 26AS

The bank reports the total interest and principal paid on the loan to the Income Tax Department. Your Annual Information Statement (AIS) and Form 26AS will show the aggregate loan details. Since these reflect the total loan, not your individual share, there may be a mismatch. As long as the sum of both co-owners' claims equals the total reported by the bank, there should be no issue.

If you receive a discrepancy notice, a written explanation along with the co-ownership agreement and split computation should resolve it.

Common Mistakes Co-Borrowers Make

1. Claiming Without Co-Ownership

A parent or sibling added as a co-borrower to increase the loan eligibility but not named as a co-owner on the sale deed cannot claim any deduction. The Income Tax Department has disallowed such claims in multiple assessments.

2. No Proof of Payment from Both Accounts

Both co-owners claim their share, but the EMI is debited entirely from one person's account with no transfer trail. The department can deny the non-paying co-owner's claim.

3. Wrong Split Ratio

Claiming 50:50 when the sale deed says 70:30, or claiming a higher share of interest than the ownership percentage, triggers a mismatch.

4. Forgetting the Regime Impact

Both co-owners claim Section 24(b) and 80C in their ITR but file under the new tax regime. The deductions are computed but not applied, resulting in zero benefit. Each co-owner must verify their regime choice and, if beneficial, opt into the old regime via Form 10-IEA before the ITR due date.

5. Double-Counting Interest

If the same interest amount appears in both co-owners' ITRs at full value (instead of being split), it will exceed the total interest reported by the bank. This is flagged automatically in the AIS reconciliation.

6. Ignoring Pre-Construction Interest

Co-owners who took possession in, say, FY 2023-24 after two years of construction often forget to compute the pre-construction interest and claim it in five instalments starting from the year of possession.

Frequently Asked Questions

Can a parent and child claim joint home loan benefits?

Yes, provided both are co-owners (names on the sale deed) and co-borrowers (names on the loan agreement). The ownership ratio determines the deduction split.

Can unmarried co-borrowers claim joint deductions?

The tax law does not require co-owners to be married. Friends, siblings, or business partners can co-own property and claim deductions in proportion to their ownership, as long as each is also a co-borrower.

What if one co-owner has no taxable income?

That co-owner's deduction is limited to their tax liability. If their total income (after deductions) falls below the basic exemption limit, the deduction provides no benefit. The other co-owner cannot claim the unused portion.

Can we change the ownership ratio after purchase?

Changing the ownership ratio requires a registered transfer deed, which attracts stamp duty and may trigger capital gains liability on the transferring co-owner. It is not a simple administrative change.

Is GST applicable on a joint home loan?

GST applies to under-construction property (effectively 5% for non-affordable and 1% for affordable housing), not to the home loan itself. The GST paid is part of the property cost and does not get a separate deduction.

Do NRIs get the same benefits on joint home loans?

NRIs who co-own Indian property and co-borrow a housing loan from an Indian bank can claim Section 24(b) and Section 80C deductions on their Indian income. TDS at source may apply on the NRI's rental income (if let-out), and the NRI must file an Indian ITR to claim refunds.

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The legal provisions referenced in this article are drawn from the Income Tax Act, 1961 (Sections 24, 80C, 80EE, and 80EEA), the Finance Act 2023 and 2024 amendments relating to the new tax regime default, and CBDT circulars on co-ownership taxation. Stamp duty value thresholds for 80EE (Rs 50 lakh) and 80EEA (Rs 45 lakh) and their respective loan sanction windows are as specified in the original legislative text. For the most current interpretation, refer to the Income Tax Department portal at incometaxindia.gov.in or consult a qualified Chartered Accountant.

Frequently Asked Questions

What if one co-borrower is not a co-owner of the property?

That co-borrower cannot claim any home loan tax benefit. To deduct interest under Section 24(b) or principal under Section 80C, a person must be both a co-owner (name on the sale deed with a defined share) and a co-borrower (name on the loan agreement). Banks frequently add a family member as a co-borrower only to boost loan eligibility. Unless that person is also recorded as an owner on the title, the EMI they pay earns them zero deduction.

Can joint home loan co-owners claim deductions under the new tax regime?

For a self-occupied property, no. Under the new tax regime, which is the default from AY 2024-25, the Section 24(b) interest deduction on self-occupied property and the Section 80C principal deduction are both withdrawn, so joint co-owners get no benefit unless they opt into the old regime. The one exception is a let-out property: interest under Section 24(b) on a let-out house remains fully deductible against rental income under the new regime as well.

How is the interest deduction split between co-borrowers?

The deduction follows the ownership share recorded on the sale deed, and each co-owner should back it with an EMI contribution in the same proportion. If ownership is 60:40, the interest is split 60:40, and for a self-occupied property each co-owner then applies the Rs 2,00,000 cap to their own share. The department can question a claim where the split does not match the ownership ratio or where one co-owner pays the entire EMI while both claim, so keep a clear payment trail from each co-owner's account.

Can both spouses claim the full Rs 2 lakh interest deduction each?

Yes, provided both are co-owners and co-borrowers and each one's share of the annual interest is at least Rs 2,00,000. For a self-occupied property the Section 24(b) cap of Rs 2,00,000 applies per co-owner, so a couple filing separately under the old regime can claim up to Rs 4,00,000 of interest between them. If a co-owner's proportionate share of interest is below Rs 2,00,000, their claim is limited to that lower actual share.