I am an Indian citizen and I have an older brother who works in Switzerland. We are both in our early 30s and have no loans against our names. We want to buy an apartment in New Delhi or Ahmedabad and need a mortgage for this purpose. This will be the first active on behalf of one of us or jointly. Can my brother and I benefit from a joint loan? How will the tax allowance based on the EMI mortgage be calculated and how will it apply in this case? Is it advisable to benefit from a solidarity loan or must it be in the name of one of us?
—Name hidden on request
Subject to bank eligibility criteria, you and your brother can apply for a joint mortgage. However, in the case of a condominium mortgage, most banks insist on condominium property.
As the property is likely to be jointly owned by you and your brother equally, the taxation of income from the property will also be shared equally. In case the property is for your own residence or is not occupied like your brother and you are employed elsewhere, your brother / you can claim an interest deduction on the home loan up to ₹2 lakh per fiscal year as loss of home ownership. The deduction will be available to the person who paid the IMEs. If you and your brother have both contributed to EMIs, then the deduction will be made in proportion to the contribution report subject to the limit of ₹2 lakh per person.
Also, with regard to the loan principal obtained from an Indian bank, your brother / you can claim the installment repayment deduction, stamp duty, registration fee and other eligible expenses for the acquisition of a house subject to the overall limit of ₹1.5 lakh for each exercise. But such deduction is only available if your brother / you have taxable income in India (other than specified income such as long term capital gains).
Additionally, depending on banks’ eligibility criteria, cost of ownership, and your ability to repay, you can apply for a home loan jointly or individually.
Sonu Iyer is Tax Partner and Leader in Human Resources Consulting Services, EY India.
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