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Home loans can be availed singly or jointly

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I am an Indian citizen and I have an elder brother who works in Switzerland. Both of us are in our early 30s and have no loan against our names. We want to purchase a flat in New Delhi or Ahmedabad and need to avail a home loan for the purpose. This will be the first asset in the name of either of us or jointly. Can my brother and I avail of a joint loan? How will the tax relief based on home loan EMI be calculated and how will it apply in this case? Is it advisable to avail of a joint loan or should it be done in the name of one of us?

—Name withheld on request

Subject to banks’ eligibility criteria, your brother and you may apply for a joint home loan. However, in case of joint home loan, most banks insist on joint ownership of property.

As the property is likely to be co-owned by your brother and yourself in equal share, the taxability of the income from the property will also be equally divided. In case the property is for your own residence or is not occupied as your brother and you are employed elsewhere, your brother/you may claim deduction for interest on housing loan up to ₹2 lakh per financial year as loss from house property. The deduction will be available to the individual who has paid the EMIs. If your brother and you have both contributed towards the EMIs, then the deduction will be pro-rated in the ratio of contribution subject to the ceiling of ₹2 lakh per individual.

Further, in respect of the principal of loan obtained from an Indian bank, your brother/you can claim deduction of repayment on instalment basis, stamp duty, registration fee and other eligible expenses for acquiring a house subject to the overall limit of ₹1.5 lakh for each financial year. But such deduction is available only if your brother/you have taxable income in India (other than specified incomes such as long-term capital gains).

Further, depending on the banks’ own eligibility criteria, cost of property and your ability to repay, you may apply for home loan jointly or singly.

Sonu Iyer is tax partner and people advisory services leader, EY India.

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