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Important tax benefits of buying a house jointly With Automated Income Tax Revised Form 16 Part B for F.Y. 2019-20 which can prepare at a time 50 and 100 and One by One Prepare Form 16 Part B A.Y.2020-21

Buying a house is a dream for millions of people in
India. The government has provided various tax benefits to individuals to
encourage them to buy a house property under the ‘housing for all’ initiative.
One of the important things to note is that if the property is held jointly,
individuals can receive additional tax benefits for the same cost. Highlighted
below are the possible tax benefits if the house property is held jointly. A
house can be held jointly with anyone not necessarily a spouse or parent, but
it can also be with a relative, friend or even a business associate.
 
1. Self-occupied house
property loss benefit to each owner
As
per provisions of the Income Tax Act, 1961 (Act), it is possible to claim a
deduction for the interest paid on the housing loan under the head “Income from
house property”. In case the house property is self-occupied, an individual can
claim a deduction of interest paid on housing loan, up to Rs 2 lakh per
financial year (FY). However, in case the house property is jointly held, then
both the house property owners will be able to claim a deduction for interest
up to Rs 2 lakh each per FY. For example, let us consider that the total home
loan interest paid in a financial year by an individual who is the sole owner
of the house property, is Rs 5 lakh per FY. The total deduction for interest
that can be claimed by him will be capped at Rs 2 lakh per FY. However, if the
property is jointly held and if the co-owners are paying their respective shares
of the home loan along with interest, then all co-owners would be entitled to
claim a deduction of up to Rs 2 lakh each per FY for the interest paid on the
home loan.
In
the initial years, when the interest amount is substantially high, a large
amount of interest can go un-utilised on account of the cap on the deduction of up
to Rs 2 lakh. In such cases, under joint ownership, each co-owner will be able
to avail the benefit of Rs 2 lakh per FY and the higher payments of interest
can be utilised.
 The
main feature of this Excel Utility:-
1)  
Prepare At time 100
Employees  Excel Based  Form 16 Part B ( Modified Format of Form 16 Part B Vide CBDT
Notification No.36/2019 Dated 12/04/2019 ]
2)  
All the Amended Income Tax
Section have in this utility as per Budget 2019
3)  
You can print individual Form
16 Part  B
4)  
Most easy to install just
like an Excel File
5)  
Easy to Fill the all column
6)  
Automatic Convert the Amount
to the In-Words
2. Let out property loss benefit to each
owner
Similar
to the above, holding property in joint names will provide a tax benefit to
individuals who receive rental income as well. Firstly, the rental income will
be divided between the owners. In case one of the co-owners falls in the lower
tax slab rate, they can avail the benefit of a lower tax rate on a part of the
rental income received. Secondly, the loss from house property for each the individual has capped at Rs 2 lakh per FY for set-off against other heads of
income of the same FY. Any loss in excess of Rs 2 lakh will be carried forward
to future years Accordingly, all the owners will be able to set off a loss of
Rs 2 lakh individually against other heads of incomes.
For
example, if the interest on housing loan exceeds the rental income and there is
a loss of Rs 4 lakh per FY, then in case of a solely-owned property, the owner
will be able to adjust the loss only up to Rs 2 lakh against the other income
earned by him. The remaining loss of Rs 2 lakh will have to be carried forward
for 8 subsequent FYs to adjust against rental income in subsequent FYs.
However, if there are two co-owners, then Rs 2 lakh can be set-off by each
co-owner per FY against the other income and accordingly, the entire loss of Rs
4 lakh will be set-off in the same FY.
3. The benefit of exemption under section 54
(Investment in house property)
Capital
gains derived from the sale of house property are taxable. As per section 54 of
the Act, if an individual purchase another residential house property within
stipulated timelines, the amount invested in the new house can be reduced from
the taxable capital gains. Section 54 explicitly states that the amount
invested in one residential house property (two properties in certain cases as
introduced by Budget 2019).
can
be reduced from the capital gains. In case the house property is jointly held,
then the capital gains will be calculated for each owner separately and each
co-owner can gain the benefit of this provision and restrict the taxable
capital gain. Each co-owner can use some/all of his portion of the first house
sale proceeds to buy another house (within the stipulated time) and thereby reduce
his/her taxable capital gain. Consequently, the total taxable capital gain
would reduce.
 The
main feature of this Excel Utility:-
7)  
Prepare At time 50
Employees  Excel Based  Form 16 Part B ( Modified Format of Form 16 Part B Vide CBDT
Notification No.36/2019 Dated 12/04/2019 ]
8)  
All the Amended Income Tax
Section have in this utility as per Budget 2019
9)  
You can print individual Form
16 Part  B
10)                    
Most easy to install just
like an Excel File
11)                    
Easy to Fill the all column
12)                    
Automatic Convert the Amount
to the In-Words
4. The benefit of exemption under section 54EC
(Investment in specified bonds)
As
per section 54EC of the Income Tax Act, if individuals invest in specified
bonds, they can claim a deduction up to Rs 50 lakh on the capital gains derived
from the sale of house property. Considering the real estate prices in India,
especially in metro cities, deduction of Rs 50 lakh may not be sufficient to
cover the capital gains and individuals will have to pay the tax on capital
gains earned in excess of Rs 50 lakh. However, if the property is jointly held,
each co-owner can invest separately in specified bonds and separately get a
deduction of Rs 50 lakh each on the investment so made. The popular section
54EC bonds are offered by National Highways Authority of India (NHAI) and Rural
Electrification Corporation (REC).
To sum up, owning a house property in joint names has
various tax benefits. However, it is important to note that the house property
should also be funded by each co-owner. Also, the shares of the co-owners
should be definite and ascertainable. Income-tax authorities are increasingly
scrutinising the funding and allocation of shares of the house properties where
the same is held in joint names and tax benefits are being claimed by more than
one individual, especially when one of the individuals is in a lower tax
bracket.

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