One person can cliam 100% deduction?

This query is : Resolved

YELLANKI RATHNAGIRI (Querist)
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12 February 2024 Wife and Husband jointly taken home loan, EMI is being paid by Husband
House was registred on both names and Both are taxable assessee in income tax

Can only wife claim 100% deduction (for Interest and Principal)???
Is it possible?????

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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09 July 2024 In the case where a husband and wife jointly own a home loan and both are taxpayers, the tax benefits related to home loan repayment can be claimed as follows:

1. **Principal Repayment Deduction (Section 80C)**:
- Both husband and wife can individually claim deduction under Section 80C for the principal repayment made towards the home loan. The maximum deduction allowed under Section 80C is Rs. 1.5 lakh per annum across all eligible investments and expenses.

2. **Interest Repayment Deduction (Section 24)**:
- For the interest repayment on the home loan, the deduction under Section 24(b) of the Income Tax Act can be claimed by both husband and wife. The maximum deduction allowed for self-occupied property is Rs. 2 lakh per annum, provided certain conditions are met.
- If the property is not self-occupied (i.e., it is let out or deemed to be let out), there is no upper limit on the interest deduction.

**Regarding the Proportion of Deduction**:
- The proportion of deduction can typically be claimed in accordance with the ownership share in the property. Since both husband and wife are joint owners, each can claim the deduction in proportion to their ownership interest, unless they have agreed otherwise and have proper documentation to support such an arrangement.
- If the husband is paying the entire EMI, but both are joint owners, it's essential to establish that both are contributing to the loan repayment, even if indirectly. If the wife intends to claim the deduction, she should ideally be able to show her contribution towards the loan repayment in some form, even if it's not directly through the EMI payment.

**Documentation and Evidence**:
- To avoid any disputes or issues during tax assessment, it's advisable to maintain proper documentation that shows both spouses' contributions towards the loan repayment.
- This can include bank statements showing the source of funds for the EMI payments, transfer of funds between spouses, or any other relevant financial records.

**Conclusion**:
While both husband and wife can potentially claim deductions for the home loan repayment, it's crucial to ensure compliance with tax laws and maintain proper documentation to substantiate the claim. If there are specific arrangements or agreements regarding the deduction, consulting with a tax advisor or accountant would be beneficial to optimize the tax benefits and avoid any discrepancies.