How to File Joint Home Loan or Co-Owner Property Income in TaxBuddy
- PRITI SIRDESHMUKH
- Sep 15
- 8 min read
Updated: Oct 7
Owning property jointly with family members or partners is a common practice in India. While joint ownership offers benefits such as shared investment costs and better financial leverage, it also introduces specific tax implications. Income from jointly owned property, whether it comes from rent or capital gains, needs to be accurately reported on tax returns. Understanding how to handle joint ownership for taxation ensures compliance with the Income Tax Act and prevents errors that may lead to penalties or delayed refunds. Platforms like TaxBuddy simplify this process, providing guidance for correct reporting, claiming deductions, and filing returns efficiently.
Table of Contents
Understanding Joint Ownership and Tax Implications
Joint ownership refers to a situation where two or more individuals legally share the title of a property. Each co-owner holds a defined share, which may be explicitly stated in the property deed or assumed to be equal if not specified. This arrangement is common among family members, business partners, or investors pooling funds for a property purchase.
From a taxation perspective, joint ownership has specific implications under the Income Tax Act. Each co-owner is individually responsible for reporting their proportionate share of income arising from the property. This includes rental income, interest on home loans, and capital gains on eventual sale. The Act allows each co-owner to claim applicable deductions, such as Section 24(b) for home loan interest and municipal taxes under Section 10(13A), corresponding to their ownership share.
Accurate reporting is crucial, as mismatches or incorrect allocations can lead to notices or penalties from the Income Tax Department. Co-owners must maintain proper documentation, such as the title deed, rent receipts, and loan statements, to substantiate their share of income and deductions.
Calculating Income from Joint Property
Income derived from a jointly owned property includes rental income and potential capital gains from selling the property.
Rental Income: Rental income is divided according to the ownership ratio. For example, if two individuals co-own a property equally and the monthly rent is ₹50,000, each should declare ₹25,000 per month as taxable income. If the ownership ratio is unequal, say 60:40, then the first co-owner would report ₹30,000, and the second ₹20,000.
Capital Gains: When the property is sold, any capital gains are also apportioned based on ownership. For instance, a ₹10 lakh gain on a property equally owned by two people would mean each reports ₹5 lakh in their respective ITRs.
Expenses and Deductions: Expenses like municipal taxes, maintenance charges, and home loan interest can be deducted proportionally. If municipal taxes are ₹12,000 per year and ownership is 50:50, each co-owner can claim a deduction of ₹6,000. Similarly, each co-owner can claim home loan interest and principal repayment deductions as per Sections 24(b) and 80C.
By following these proportional calculations, co-owners ensure correct reporting of income, maximisation of deductions, and compliance with income tax regulations. Proper record-keeping, including receipts and loan statements, is essential to justify the declared shares in case of any scrutiny by the Income Tax Department.
Claiming Home Loan Deductions
When two or more individuals co-own a property and have a joint home loan, tax deductions on the principal repayment and interest need to be correctly allocated according to each owner’s share. Under Section 80C, principal repayments of a home loan qualify for deductions up to ₹1,50,000 per individual per financial year. For instance, if a joint home loan has an annual principal repayment of ₹4,00,000 and two co-owners each hold a 50% stake, then each can claim ₹2,00,000 × 50% = ₹2,00,000? Wait, let’s calculate carefully:
Annual principal repayment: ₹4,00,000
Ownership share: 50% each
Deduction under Section 80C per owner = ₹4,00,000 × 50% = ₹2,00,000
However, since the maximum 80C limit per individual is ₹1,50,000, each co-owner can claim ₹1,50,000.
For Section 24(b), interest paid on the home loan is eligible for deduction up to ₹2,00,000 per individual for a self-occupied property. For example, if the annual interest paid is ₹3,00,000 and both owners have equal shares, each can claim ₹3,00,000 × 50% = ₹1,50,000. Correct allocation ensures maximum tax benefit while remaining fully compliant with income tax regulations.
Choosing the Correct ITR Form
Selecting the appropriate ITR form is crucial for reporting joint property income accurately. Salaried individuals who receive rental income generally file either ITR-1 or ITR-2, depending on additional income sources. If there are capital gains from the sale of property, ITR-2 becomes mandatory, as ITR-1 does not support reporting capital gains.
Co-owners who have business income, multiple properties, or income from other sources may need ITR-3 or ITR-4, which accommodate complex income streams. Accurate selection of the ITR form ensures all sources of income, deductions, and co-owner allocations are correctly reported. Filing with the correct ITR prevents mismatches, reduces the likelihood of notices, and avoids delays in processing refunds or deductions.
Reporting Property Details in TaxBuddy
TaxBuddy provides a structured interface to report joint property income. Each co-owner can enter property details, ownership percentage, rental income, and loan deductions. The platform calculates the correct taxable share and integrates it into the chosen ITR form. Using TaxBuddy ensures accurate documentation, minimizes errors, and keeps all calculations transparent for audit purposes.
Rental Income and Capital Gains for Co-Owners
When a property is co-owned, rental income is taxed individually based on each owner’s proportionate share. For example, if two people own a property equally, each owner must declare 50% of the total rental income in their individual tax return. Similarly, capital gains arising from the sale of a property are apportioned according to ownership. For instance, if a property is sold for a profit of ₹50,00,000 and two co-owners hold equal shares, each would report ₹25,00,000 as capital gain. The calculation applies to both short-term and long-term capital gains, depending on the holding period. Costs incurred for the property, such as brokerage fees, renovation expenses, or legal charges, can be allocated proportionally among co-owners and claimed as deductions. This ensures that each co-owner’s taxable income is calculated accurately, reflecting only their share of the gains or expenses. Proper allocation prevents errors, avoids disputes, and ensures compliance with Income Tax regulations.
How to File in TaxBuddy Mobile App
TaxBuddy’s mobile app simplifies filing ITR for co-owned property income. Users can enter property details, including ownership shares, rental income, and capital gains. The app automatically calculates taxable income for each co-owner and applies eligible deductions, such as property improvement costs or brokerage fees, proportionally. It then generates the correct ITR form based on the user’s profile and type of income. After reviewing the return, users can submit it electronically, with the app supporting e-verification for seamless filing. Additionally, TaxBuddy tracks refund status, sends timely alerts for discrepancies, and helps manage documentation efficiently. Filing co-owned property income using the app reduces manual calculations, ensures accurate tax reporting, and saves significant time, making the process hassle-free for co-owners while maintaining compliance with the Income Tax Act.
Conclusion
Proper handling of jointly owned property for tax purposes is crucial to avoid errors, maximize deductions, and ensure timely refunds. By correctly calculating income, claiming applicable home loan deductions, and using platforms like TaxBuddy, co-owners can streamline the filing process and remain fully compliant. For anyone managing joint property income, it is highly recommended todownload the TaxBuddy mobile app for a secure, accurate, and hassle-free filing experience.
FAQs
Q1. Can co-owners claim home loan deductions separately?
Yes, each co-owner of a property can individually claim deductions under Section 80C for principal repayment and Section 24(b) for interest on the home loan. The amount of deduction must correspond to each co-owner’s share in the property and the loan. For example, if two co-owners own 50% each and pay half of the home loan each, both can claim 50% of the eligible deductions on their respective ITRs. Proper documentation, like loan statements and ownership proof, should be maintained to support claims in case of scrutiny.
Q2. How is rental income shared among co-owners for tax purposes?
Rental income from jointly owned property is divided according to each co-owner’s ownership percentage. Each co-owner must report their share of rental income on their individual ITR. For instance, if a property owned 60:40 by two individuals earns ₹1,00,000 annually in rent, the first owner will report ₹60,000 and the second ₹40,000. Expenses like municipal taxes, maintenance, and interest on home loans can also be apportioned proportionally to reduce taxable income.
Q3. Which ITR form should be used for joint property with rental income?
Typically, ITR-1 (Sahaj) can be used if the rental income is the only income apart from salary or other simple sources. If there are capital gains, multiple sources of income, or more complex deductions, ITR-2 is preferred. Choosing the correct form ensures accurate reporting and avoids processing errors or notices from the Income Tax Department.
Q4. Can capital gains from joint property be split between owners?
Yes, any capital gains from selling a joint property are apportioned according to each co-owner’s share. Short-term or long-term capital gains are calculated separately for each owner, based on their holding period and investment share. Each co-owner reports their portion in their respective ITR. Proper documentation like sale deed, ownership proof, and cost of acquisition records is required for accurate calculation and deduction claims, such as under Section 54 for reinvestment in residential property.
Q5. Does TaxBuddy calculate ownership-based tax liabilities automatically?
Yes, TaxBuddy provides automated calculations for income, deductions, and taxable shares for co-owners. By inputting the ownership percentages, rental income, loan details, and expenses, the platform generates accurate individual tax liabilities. This ensures that each co-owner claims the correct deductions and reports their share accurately, saving time and avoiding errors in manual calculations.
Q6. Can municipal taxes and maintenance costs be deducted for joint property?
Yes, municipal taxes (property tax) and certain maintenance expenses can be proportionally deducted from rental income for tax purposes. These deductions reduce taxable rental income and are divided according to each co-owner’s ownership percentage. Proper bills and payment proofs should be maintained, as the Income Tax Department may ask for evidence during scrutiny.
Q7. Is it necessary to report joint property income even if co-owners live in the same house?
Yes, any rental income or capital gains from a jointly owned property must be reported individually, even if co-owners live in the property themselves. Not reporting income or gains can attract penalties or notices under the Income Tax Act. Personal residence status does not exempt owners from declaring their share of income or claiming eligible deductions.
Q8. What if one co-owner fails to report their share?
If a co-owner does not report their portion of income or capital gains, the Income Tax Department may issue notices, and penalties could apply. Non-reporting can also create mismatches in TDS claims or exemptions claimed by other co-owners. It is crucial that all co-owners file accurately and in a timely manner to avoid legal complications or unnecessary scrutiny.
Q9. Can TaxBuddy e-verify the filed return?
Yes, TaxBuddy supports e-verification, enabling taxpayers to submit their ITR directly online without needing to send signed physical copies to the Income Tax Department. E-verification ensures faster processing, reduces chances of errors, and is a secure method to confirm submission. TaxBuddy provides step-by-step instructions for completing e-verification through Aadhaar OTP, net banking, or DSC.
Q10. How does TaxBuddy simplify filing for joint property owners?
TaxBuddy provides a user-friendly interface that guides co-owners through step-by-step ITR filing. It automatically calculates ownership shares, allocates income, and applies deductions correctly. The platform ensures the appropriate ITR form is selected, TDS credits are matched, and all filings comply with Income Tax rules, minimizing errors and processing delays.
Q11. Are short-term and long-term capital gains treated differently for co-owners?
Yes, short-term and long-term capital gains are calculated separately based on the holding period for each co-owner. Short-term gains (property held ≤24 months) are taxed at the applicable slab rate, while long-term gains (property held >24 months) qualify for 20% tax with indexation benefits. Each co-owner reports their proportionate gains and claims deductions accordingly, ensuring accurate tax calculation.
Q12. Can joint property deductions be claimed under both old and new tax regimes?
Yes, deductions like Section 80C for principal repayment and Section 24(b) for home loan interest can be claimed under both tax regimes. However, the limits and rules differ. Under the new regime, most deductions are restricted, whereas the old regime allows full deductions. Each co-owner must choose the regime that maximizes their tax benefit, based on their total income and eligibility.
