My wife and I are salaried and intend to take a home loan. We want to register the house in the name of both of us. Should we apply for the loan jointly? Every individual is entitled to deductions of up to Rs 1.5 lakh on interest repayment under Section 24(2) and up to Rs 1 lakh on principal repayment under Section 80C. When you apply for a loan jointly, here is how you end up enhancing tax savings.
If you take a Rs 25 lakh loan for 15 years at 7.5 per cent rate of interest, you will pay Rs 1.84 lakh as interest in the first year. If you apply alone, you will be able to claim a tax deduction for Rs 1.5 lakh only. Of course, you will be able to claim Rs 93,784 as deduction for principal repayment under Section 80C (maximum limit: Rs 1 lakh).
If you apply jointly with your spouse, assuming that you are both in the highest tax bracket, you would both be able to claim Rs 92,159 under Section 24(2) and thus make the interest payment fully exempt from tax. A deduction of Rs 46,892 each can be claimed for principal repayment under Section 80C by both of you. This will help you claim deductions for other permissible investments. The tax saving in joint loan application is much higher—at Rs 83,431 compared to Rs 73,135 in a single application.;
