DJ (software) 25 June 2010

where to define share in joint ownership: tax benefit

Hello,
I understand that if husband and wife purchase a flat as co-owner and both of them have taken home loan as co-borrower, both of them can avail income tax benefit.
I wanted to know whether this tax benefit depends only on EMI payment ratio or it depends on their share in property as well. Does percentage ratio should be same for EMI payment and property share? Please also suggest that in which document this percentage of share in co ownership and the type of co ownership should be defined(I do NOT want it to be 50%)
(Is it the sale deed which is prepared by builder for purpose of Registration and stamp duty while purchasing a flat OR any other document is prepared)?

Thanks

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2 Replies

A V Vishal (Advocate) 28 June 2010

The relation between a husband and wife is not business like, that you pay a certain amount since you are using this much percentage of space of your house and like. Whatever you pay depends on various factors, in a month you can contribute less to the EMI or more in another. In order to claim the deduction it is best that you claim the actual amounts contributed towards the emi in your tax returns.

Vineet (Director) 30 June 2010

The tax benefits shall not be in the ratio in which EMIs are paid but the share in the ownership of property.

In absence of any express declaration, the share is determined in the ratio in which payment for property has been made. The share can be expressly defined in the purchase agreement itself but the financin institution may object to such express declaration.

You can define the ownership ratio in a seperate declaration.