Tax Deduction Benefits upto Rs. 1.5 Lacs for Co-Owners

My spouse and I are joint owners to a flat used for self-occupancy. We are co-borrowers to a home loan we have taken from the bank. Will the limit of Rs.1, 50, 000 apply individually to both of us (i.e. total deduction will be Rs.3, 00,000) or, will the total deduction be restricted to Rs.1, 50,000? How will the tax benefits be distributed among us? Our ownership pattern is as follows:

Cost of the Flat: Rs.1, 00, 00,000

Ownership share: 60% for Husband and 40% for wife

Loan from Bank: Rs. 60 lacs

Amount to be bought in by husband: Rs. 60, 00,000

Less: Own contribution bought in by husband: Rs. 20, 00,000

Husband’s share in the loan: Rs. 40, 00,000

Amount to be bought in by wife: Rs. 40, 00,000

Less: Own contribution bought in by wife: Rs. 20, 00,000

Wife’s share in the loan: Rs. 20, 00,000

The maximum limit of Rs.1, 50,000 will apply individually to both of you (i.e. the total deduction will be limited to Rs.3, 00,000). The relevant sections in this regard are, the explanation to Section 26 as well as Section 23(2) and Section 24 (b).

The tax benefits will be shared in the ratio of 2:1 for husband and wife, since that is the share of the loan for husband and wife. Both can enter into a share agreement, indicating the respective shares in the property and the loan.

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