How to Report Joint Property Income and Claim Deductions
- Rashmita Choudhary
- Dec 1
- 9 min read
Accurately reporting income from a jointly owned property is essential for ensuring fair tax treatment under the Income Tax Act, 1961. Co-owners must assess their ownership ratio, calculate their respective income shares, and claim deductions that align with current tax laws. The 2025 Budget and recent ITAT rulings have clarified how ownership contribution, home loans, and rental income affect taxation. This ensures that individuals and families can now file returns more transparently, reduce errors, and maximize eligible deductions under the appropriate regime.
Table of Contents
Understanding Joint Ownership and Tax Implications
Joint ownership of property is common among spouses, family members, or business partners. Under the Income Tax Act, income from jointly owned property must be divided based on the ownership share mentioned in the property documents or contribution ratio. This affects how each co-owner reports income, claims deductions, and pays tax. Proper reporting ensures compliance and prevents double taxation. If both co-owners are earning rental income, their respective shares must be disclosed separately under “Income from House Property” in the Income Tax Return (ITR).
How to Report Joint Property Income in ITR
When two or more individuals jointly own a property, the rental income is divided according to their ownership share. Each co-owner must report their portion of income under “Income from House Property” in their ITR. For example, if two owners hold equal shares, each should declare 50% of the annual rental value, less applicable deductions like municipal taxes and standard deduction under Section 24(a). This prevents duplication and ensures accurate tax liability distribution.
Determining Ownership Share for Tax Purposes
Ownership share is determined either by the contribution made during property purchase or as per the ownership ratio stated in the property’s sale deed. If one co-owner contributes more towards the loan repayment or purchase price, they can claim a proportionally higher deduction. However, if the property title mentions equal ownership, the tax authorities typically consider a 50:50 ratio unless proven otherwise with payment evidence.
Claiming Deductions on Joint Property
Each co-owner can claim deductions for municipal taxes, standard deduction, and interest on a home loan under Sections 24(a) and 24(b), in proportion to their ownership share. For a self-occupied property, the interest deduction limit is ₹2 lakh per owner per year. For rented property, there is no upper limit on interest deduction, but the set-off of loss from house property is restricted to ₹2 lakh against other income.
Standard Deduction Under Section 24(a)
Section 24(a) provides a standard deduction of 30% of the Net Annual Value (NAV) of the property. This deduction is available to all co-owners on their respective share of income from the property. The deduction applies even if actual expenses are lower or higher, simplifying the computation of taxable income.
Interest Deduction Under Section 24(b)
Each co-owner who is also a co-borrower on the home loan can claim a deduction on the interest paid, up to ₹2 lakh per year for self-occupied property. If the property is rented out, there is no upper limit on the interest amount; however, the total loss set-off allowed in a financial year is capped at ₹2 lakh. Interest paid during the pre-construction phase can be claimed in five equal installments starting from the year of possession.
Claiming Principal Repayment Under Section 80C
Under Section 80C, each co-owner who is a co-borrower can claim a deduction up to ₹1.5 lakh per financial year for the principal portion of home loan EMIs. The deduction is available only after the property’s construction is completed. If the property is sold within five years of possession, all deductions claimed under Section 80C will be reversed and added back to the taxable income.
Property Tax and Other Deductible Expenses
Municipal taxes paid during the financial year can be deducted from the gross annual value to arrive at the Net Annual Value. Only the owner who has actually paid the taxes can claim this deduction. Other permissible deductions include maintenance charges or service fees, provided they are not capital in nature. These deductions must be supported by valid receipts or proof of payment.
Is Joint Property Deduction Allowed in New Tax Regime?
Under the new tax regime, most deductions, including Sections 80C and 24(b), are not available for self-occupied properties. However, if the joint property is rented out, co-owners can still claim interest deduction on the loan under Section 24(b). Therefore, taxpayers who have significant home loan repayments and property-related deductions generally find the old regime more beneficial.
How Joint Home Loan Impacts Deduction Eligibility
A joint home loan enhances tax-saving opportunities since both co-borrowers can claim deductions individually. To be eligible, both must be co-owners and co-borrowers, and the property should be jointly registered. Each can claim up to ₹1.5 lakh under Section 80C and ₹2 lakh under Section 24(b), depending on their repayment share. If only one partner pays the EMI, the entire deduction can be claimed by that individual.
Capital Gains on Sale of Jointly Owned Property
When a jointly owned property is sold, capital gains are divided according to ownership share. Each co-owner can claim exemption individually under Sections 54, 54F, or 54EC by reinvesting their share of the capital gain. The holding period for determining whether the gain is short-term or long-term is based on the original date of acquisition. Accurate documentation of the ownership ratio is essential for claiming proportional exemptions.
Documentation and Proofs Required for Compliance
Essential documents include the property sale deed, home loan sanction letter, repayment statements, municipal tax receipts, and ownership proof. These records substantiate ownership share and loan contribution for tax authorities. In case of joint loans, both borrowers should retain individual payment proofs, such as bank statements showing EMI payments, to claim deductions correctly.
Common Mistakes and How to Avoid Them
Common errors include claiming the full deduction despite partial ownership, ignoring the co-borrower’s share, or claiming deductions before property completion. Some taxpayers also miss declaring rental income under the “Income from House Property” head. To avoid these mistakes, ensure ownership, loan contribution, and deductions are reported accurately and in proportion to actual payment. Filing through expert-assisted platforms like TaxBuddy helps avoid such issues.
Key Legal Precedents and 2025 Updates
Recent rulings reaffirm that deductions can be claimed only in proportion to ownership and repayment contribution. Budget 2025 retained the same limits for interest and principal deductions under Sections 24(b) and 80C but emphasized digital documentation for ownership verification. Co-owners must maintain electronic copies of property records, loan certificates, and municipal payment receipts to ensure compliance.
How TaxBuddy Helps with Joint Property Reporting
TaxBuddy simplifies joint property reporting by automatically identifying ownership ratios, calculating allowable deductions, and cross-verifying income data with AIS and Form 26AS. It ensures accuracy while claiming interest, principal, and municipal deductions for each co-owner. Whether the property is self-occupied or rented, TaxBuddy’s system flags inconsistencies to prevent notices and maximize tax savings.
Conclusion
Joint property ownership can be a powerful way to save on taxes while building shared assets, but it demands accurate reporting and documentation. Understanding ownership ratios, applicable sections, and deduction limits ensures compliance and prevents disputes. Platforms like TaxBuddy make this process seamless by offering guided support and automated computation for joint property reporting.
For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. How is income from jointly owned property divided for tax purposes? Income from jointly owned property is divided according to each owner’s share in the property. This division is based either on the ownership ratio stated in the sale deed or on the proportion of each co-owner’s financial contribution. Each co-owner must report only their share of the income under the head “Income from House Property” while filing the ITR. The tax liability is calculated separately for each owner, ensuring that income is not taxed twice on the same property.
Q2. Can both co-owners claim tax benefits on a joint home loan? Yes, both co-owners can claim tax benefits if they are co-borrowers of the same loan. Each co-owner is eligible to claim deductions individually for the principal and interest payments made, provided they contribute to the EMIs. The benefit is available under Sections 80C for the principal portion and 24(b) for the interest portion of the loan. To qualify, both names must appear on the property papers as well as the loan documents.
Q3. How much deduction can be claimed on home loan interest by each co-owner? Each co-owner can claim a maximum deduction of ₹2 lakh per financial year on the interest portion of the home loan under Section 24(b), if the property is self-occupied. For rented or let-out properties, there is no upper limit on the interest deduction, but the overall loss from house property that can be set off against other income is limited to ₹2 lakh in a year. Any unadjusted loss can be carried forward for up to eight years.
Q4. Can both owners claim Section 80C benefits for principal repayment? Yes, both owners can claim a deduction of up to ₹1.5 lakh each under Section 80C for the principal repayment of their respective loan shares. The claim must be in proportion to each co-owner’s EMI contribution. If only one person is paying the EMIs, that individual alone can claim the deduction. Proper documentation, such as the loan statement and bank proof of payments, is required to validate these claims.
Q5. What happens if one co-owner doesn’t contribute to the EMI? If one co-owner does not contribute to the EMI payments, they cannot claim any tax benefits, even if their name appears on the loan or property documents. Only the person making the actual repayments is eligible to claim deductions under Sections 80C and 24(b). The Income Tax Department allows claims strictly on the basis of payment evidence and ownership status.
Q6. Can joint property deductions be claimed under the new tax regime? Most deductions, including Sections 80C and 24(b), are not available under the new tax regime for self-occupied properties. However, if the property is rented out, the interest paid on the loan can still be claimed as an expense while calculating income from house property. Taxpayers who wish to maximize home loan benefits generally prefer the old tax regime, where these deductions are available in full.
Q7. How are capital gains taxed when joint property is sold? When a jointly owned property is sold, the capital gains are divided among co-owners based on their ownership share. Each owner must report their share of the gain under “Capital Gains” in their ITR and can independently claim exemptions under Sections 54 or 54F if they reinvest in another residential property or eligible asset. The period of holding and cost of acquisition are also calculated proportionately for each co-owner.
Q8. Are siblings eligible for joint ownership tax benefits? Yes, siblings can claim tax benefits on a jointly owned property if both are registered co-owners and co-borrowers of the home loan. The same eligibility conditions apply as in the case of spouses—each sibling can claim deductions in proportion to their financial contribution toward the EMIs and ownership share. Clear documentation and consistent payment records are necessary for valid claims.
Q9. Can municipal taxes be claimed by both co-owners? Yes, municipal taxes paid for the property can be claimed proportionately by each co-owner. The deduction is allowed under “Income from House Property” before calculating the net annual value. To claim this, the payment receipts must clearly show that the taxes were paid by the owners and not by tenants. Proper allocation and documentation ensure that both co-owners receive their fair share of the deduction.
Q10. What documents are needed to claim deductions on joint property? Key documents include the registered property deed showing ownership share, home loan certificate from the lender, EMI payment proofs, bank statements showing transactions, municipal tax receipts, and the possession certificate. These documents are required to verify ownership and repayment contributions during tax filing or assessment. Keeping digital copies of these records is advisable for quick reference while filing online.
Q11. How can TaxBuddy assist with joint property income reporting? TaxBuddy simplifies joint property reporting by automatically calculating ownership-based income distribution and eligible deductions. It syncs AIS and 26AS data, validates EMI contributions, and ensures accurate computation under relevant sections. Whether under the old or new regime, TaxBuddy ensures that deductions like 80C and 24(b) are correctly applied, helping taxpayers avoid mismatches or disallowances during scrutiny.
Q12. What is the most common mistake taxpayers make with joint property? The most frequent mistake is when one co-owner claims the entire deduction instead of proportionately sharing it according to ownership and payment contribution. This often leads to discrepancies during assessment or notice from the Income Tax Department. Another error is failing to align property ownership documents with actual EMI contributions. Filing through a verified platform like TaxBuddy prevents such mismatches and ensures complete compliance.
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