Home / Money / Personal Finance /  Flat is in my wife's name but I pay for EMIs. Can I claim income tax benefits?

I have taken a home loan from State Bank of India during current year. My wife is the prime applicant and I am co-applicant. The EMI is being paid from my wife’s bank account. My wife is not claiming the tax rebate on this. Can I claim tax rebate on the housing loan on which I am co-applicant? I am arranging the money for bank account of my wife. My company says that you cannot claim because EMI is going from your wife’s bank account. The house is in single name of wife.

An individual or an HUF can claim two tax benefits in respect of home loan. The first deduction is available in respect of home loan taken from specified entities under Section 80C for repayment of principal of home loan taken buying/constructing a residential house. The other benefit is available under Section 24(b) in respect of interest paid for construction/purchase/repair/renovation of any property in respect of money borrowed from anyone and not necessarily from specified entities.

For claiming both these deductions you need to satisfy two basic conditions. Firstly, you should be owner of the house whether as sole owner or as joint owner. Secondly, you should be either a sole borrower or co-borrower and servicing the home loan.  You can claim both these deductions in the ratio of your respective share in the home loan which need not be the same as your share in the property as the funding source for all the joint owners need not be the same. 

Please note the ratio of the ownership and thus in the loan gets crystalized at the initial stage and cannot be changed later on. Since you do not satisfy the basic condition of being either the sole or joint owner, you cannot claim any tax benefit in respect of EMIs being paid.  Even if the EMIs were paid directly by you or you reimbursed it to your wife, you would not have been able to claim these deductions.

Balwant Jain is a tax and investment expert and be reached on jainbalwant@gmail.com and at @jainbalwant on his Twitter handle.

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