Buying a house jointly with your spouse may improve loan eligibility, simplify succession and, in appropriate cases, provide tax benefits to both spouses.

But merely adding two names to a sale deed or home-loan application does not automatically double the tax deduction.

The tax result depends on five connected questions:

1. Who legally owns the property?
2. What percentage does each spouse own?
3. Who has borrowed the money?
4. Who is actually paying the down payment and loan instalments?
5. Which tax regime has each spouse selected?

If the sale deed, loan documents, bank payments and income-tax returns do not tell the same story, the deduction may be questioned.

This article breaks down the most common myths about jointly owned property under the Income-tax Act, 2025, applicable from 1 April 2026. The corresponding provisions of the earlier Income-tax Act, 1961 are also mentioned wherever useful.

Myth 1: “Both our names are in the sale deed, so both of us can claim home-loan deductions”

The fact: Joint ownership is only the first condition.

For a spouse to claim interest on a housing loan, that spouse should ordinarily be:

• An owner or co-owner of the property;
• A borrower or co-borrower under the housing loan;
• Liable for the interest; and
• Able to establish the portion of the loan actually borne by him or her.

If the wife is named only as a co-borrower but is not an owner, she cannot claim a house-property deduction merely because her name appears in the loan documents.

Similarly, if she is an owner but is not a borrower and has not borne the interest liability, her name in the sale deed alone does not produce a home-loan deduction.

The correct approach is to align the sale deed, loan agreement and repayment arrangement before the transaction is completed.

Myth 2: “If the property is jointly registered, ownership is automatically 50:50”

The fact: Ownership should be expressly stated in the sale deed.

A property can be owned in any commercially supportable ratio, such as:

• 50:50
• 60:40
• 70:30
• 90:10

The ratio should reflect the parties’ intention and, wherever possible, their respective financial contributions.

Section 24 of the Income-tax Act, 2025 corresponding to section 26 of the earlier Act provides for separate assessment of co-owners where their shares are definite and ascertainable.

If the deed does not specify the ownership ratio, section 45 of the Transfer of Property Act, 1882 may become relevant. Broadly, the respective interests may be determined with reference to the consideration contributed by each person. Equal ownership is generally presumed only where there is no evidence of the respective contributions or a contrary agreement.

Therefore, leaving the ownership percentage unstated is not a tax-planning strategy. It is an avoidable documentation risk.

Myth 3: “Every joint owner can automatically claim ₹2 lakh as interest deduction”

The fact: The ₹2 lakh amount is a ceiling, not an automatic allowance.

For a qualifying self-occupied house, the maximum interest deduction may be available to each eligible co-owner under section 22 of the Income-tax Act, 2025 corresponding to section 24(b) of the earlier Act—subject to the applicable conditions.

The deduction depends on:

• The spouse’s ownership share;
• The amount borrowed by that spouse;
• The interest attributable to that spouse;
• The amount actually borne under the repayment arrangement;
• Completion of construction within the prescribed period;
• Availability of the lender’s interest certificate; and
• Selection of the old tax regime.

Example

A husband and wife own a house equally and are equal co-borrowers. The total eligible interest for the year is ₹5 lakh, and both spouses service the loan equally.

Each spouse’s share of interest is ₹2.50 lakh. Subject to the statutory conditions, each may claim up to ₹2 lakh under the old regime.

But if the total interest is only ₹2.40 lakh, the deduction does not become ₹2 lakh each. Ordinarily, each spouse’s claim would be restricted to the supportable share of ₹1.20 lakh.

The ₹2 lakh ceiling does not create an expenditure that was never incurred.

Myth 4: “One spouse can pay the entire EMI and the couple can divide the deduction in any ratio”

The fact: A deduction cannot be divided merely according to convenience.

Suppose a property is owned equally, but the husband pays every EMI from his personal account. The couple cannot simply decide at the time of filing their returns that both will claim 50% each without examining the underlying arrangement.

The tax position should be supported by:

• Ownership ratio;
• Borrowing ratio;
• Actual repayment;
• Source of the down payment;
• Internal reimbursement between the spouses, if any; and
• Documentary evidence created at the time of payment.

At the same time, payment of the entire EMI by one spouse does not automatically permit that spouse to claim 100% of the deduction if the deed establishes a smaller ownership interest.

Ownership, borrowing and payment must be examined together.

Myth 5: “The principal repayment deduction is an additional ₹1.5 lakh for every spouse”

The fact: The ₹1.5 lakh limit is part of an overall deduction basket.

Under the old regime, eligible housing-loan principal repayment, stamp duty and registration charges may fall within section 123 read with Schedule XV of the Income-tax Act, 2025 corresponding broadly to section 80C of the earlier Act.

The overall ceiling is ₹1.5 lakh per eligible taxpayer. It is not an additional deduction reserved exclusively for home-loan principal.

The same ceiling may already be used by:

• Employee provident fund contributions;
• Public provident fund deposits;
• Life insurance premiums;
• Eligible tuition fees;
• Equity-linked savings schemes;
• Housing-loan principal repayment; and
• Other qualifying investments or payments.

Example

Assume the wife has already claimed:

• Employee provident fund: ₹90,000
• Life insurance premium: ₹25,000

Only ₹35,000 of the ₹1.5 lakh basket remains available for eligible housing-loan principal or registration expenditure.

The existence of a joint home loan does not increase the overall statutory ceiling.

Myth 6: “Principal repaid to any lender qualifies for deduction”

The fact: The identity of the lender matters for the principal-repayment deduction.

Interest and principal are governed by different provisions.

Interest on capital borrowed for acquisition, construction, repair, renewal or reconstruction may qualify if the statutory conditions and use of funds are established.

However, principal repayment does not qualify merely because money was borrowed for a house. The repayment must satisfy section 123 and Schedule XV, including the prescribed category of lender or authority.

Therefore, a loan from a relative, friend or unrecognised private financier may require different treatment:

• The interest claim must be independently tested and documented;
• The principal repayment should not automatically be claimed within the ₹1.5 lakh basket; and
• The borrower should preserve the loan agreement, bank trail and evidence showing the utilisation of funds.

A housing loan sanctioned by a bank and a private family loan should not be assumed to receive identical tax treatment.

Myth 7: “The full deduction starts as soon as construction begins”

The fact: An under-construction property follows different timing rules.

Regular interest deduction is generally claimed after the property has been acquired or construction has been completed.

Eligible interest relating to the pre-construction period is generally allowed in five equal instalments beginning with the tax year in which the acquisition or construction is completed, subject to the applicable overall limit and other conditions.

Example

Suppose eligible pre-construction interest totals ₹5 lakh.

After completion, it may ordinarily be spread over five instalments of ₹1 lakh each. The instalment is added to the regular interest for the relevant year, but the combined claim remains subject to the applicable statutory ceiling for a self-occupied property.

Couples should preserve:

• Loan sanction letters;
• Interest certificates for every year;
• Builder payment schedules;
• Construction progress documents;
• Completion or occupancy certificate; and
• Possession letter.

The date of booking, date of registration, date of possession and date of completion may not always be the same. The correct date must be identified from the facts and documents.

Myth 8: “First-time homebuyers still receive an additional ₹50,000 or ₹1.5 lakh interest deduction”

The fact: These benefits were linked to historical loan-sanction periods.

Sections 130 and 131 of the Income-tax Act, 2025 correspond to sections 80EE and 80EEA of the earlier Act.

These provisions continue to matter for loans that were sanctioned during the specified historical periods and satisfy all the original conditions.

Broadly:

• The additional ₹50,000 deduction was linked to loans sanctioned between 1 April 2016 and 31 March 2017, subject to prescribed conditions.
• The additional deduction of up to ₹1.5 lakh for specified affordable housing was linked to loans sanctioned between 1 April 2019 and 31 March 2022, subject to the stamp-value, ownership and other conditions.

A person taking a new home loan in 2026 does not become eligible merely because it is his or her first house.

The loan-sanction date cannot be ignored.

Myth 9: “The old and new tax regimes provide the same home-loan benefits”

The fact: The tax regime can completely change the result.

Under the default new tax regime governed by section 202 of the Income-tax Act, 2025—corresponding to section 115BAC of the earlier Act:

• Interest on a self-occupied property is generally not deductible;
• The section 123/Schedule XV deduction for eligible principal repayment, stamp duty and registration charges is generally unavailable;
• A house-property loss cannot be set off against salary, business income or income from other heads; and
• Loss affected by the restrictions under section 202 should not be assumed to remain available for future carry-forward.

Under the old regime, eligible deductions may continue, subject to their respective conditions and ceilings.

Each spouse is a separate taxpayer. Therefore, the husband and wife may arrive at different tax-regime choices depending on their respective salary, investments, deductions and other income.

The correct comparison is the final tax liability under each regime not the amount of one isolated deduction.

Myth 10: “Interest on a rented property is unlimited, so the entire loss can be adjusted against salary”

The fact: The interest deduction and the loss set-off are two different questions.

For a let-out property, the income is broadly computed as follows:

Gross annual value or rent
Less: Municipal taxes actually paid, where eligible
Less: 30% standard deduction
Less: Eligible interest on borrowed capital
Equals: Income or loss from house property

Interest attributable to a let-out property may not carry the same monetary ceiling that applies to a self-occupied house. However, that does not mean the entire resulting loss can be adjusted against salary.

Under the old regime:

• Set-off of house-property loss against income under other heads is generally restricted to ₹2 lakh for the tax year.
• The eligible unadjusted balance may generally be carried forward for up to eight tax years.
• The carried-forward loss can ordinarily be adjusted only against income from house property.

Under the default new regime, cross-head set-off is not available, and section 202 imposes additional restrictions.

Example

A jointly owned let-out property produces a total house-property loss of ₹6 lakh. The spouses own and service the property equally.

Each spouse’s share is ₹3 lakh.

Under the old regime, each spouse may generally set off up to ₹2 lakh against income under other heads, subject to the statutory conditions. The remaining ₹1 lakh in each spouse’s case must be examined under the carry-forward provisions.

The couple cannot treat the entire ₹6 lakh as one common family loss and allocate it to whichever spouse has the higher salary.

Myth 11: “If one spouse gifts money to the other, future rent will be taxed only in the recipient spouse’s return”

The fact: Transfers between spouses can attract deemed-ownership and clubbing provisions.

Section 25(a) of the Income-tax Act, 2025 corresponding to section 27(i) of the earlier Act contains deemed-ownership provisions where house property is transferred to a spouse without adequate consideration, subject to the statutory exceptions.

Section 99 corresponding to section 64(1)(iv) of the earlier Act contains clubbing provisions for income arising from assets transferred to a spouse without adequate consideration.

Therefore, adding a spouse’s name or gifting funds to purchase that spouse’s share does not automatically shift rental income or future capital gains into the lower-income spouse’s return.

The tax officer may examine:

• Who supplied the purchase consideration;
• Whether the amount was a genuine gift or documented loan;
• Whether the recipient spouse had an independent source of funds;
• Whether consideration was actually paid; and
• Whether the arrangement has been consistently reflected in the parties’ records.

A family arrangement should not be represented as an independent investment unless the documents and cash flow support that position.

Myth 12: “Payment from a joint bank account proves that both spouses paid equally”

The fact: The name of the bank account does not establish the source of money.

A joint account may be funded entirely by one spouse.

For example, if the husband’s salary is the only amount credited to a joint account and the EMI is debited from that account, the joint nature of the account does not by itself prove that the wife contributed 50%.

Couples should maintain a traceable record of:

• Down-payment contributions;
• Transfers made by each spouse;
• EMI contributions;
• Reimbursements between spouses;
• Gifts or family loans; and
• Interest and principal certificates.

Where repayments are made through one joint account, a contemporaneous written record of the intended contribution ratio can reduce future disputes. However, the written record must agree with the actual flow of funds.

Myth 13: “Buying the house in the wife’s name always reduces stamp duty”

The fact: Stamp duty is governed by State law, not by the Income-tax Act.

Some States provide a lower stamp-duty rate when property is purchased in the name of a woman. Other States may:

• Provide no concession;
• Limit the concession to specified transactions;
• Prescribe conditions for joint ownership; or
• Change the rate through subsequent notifications.

Therefore, the concession must be checked from the relevant State registration authority before executing the sale deed.

A stamp-duty concession should also not be confused with an income-tax deduction. They are separate benefits governed by different laws.

Myth 14: “A person claiming HRA cannot claim home-loan deductions”

The fact: Both may be claimed under the old regime if the facts independently support both claims.

A taxpayer may own a house and still live in rented accommodation for genuine reasons, such as:

• Employment in another city;
• The owned property being occupied by parents;
• The house being under construction;
• The house being rented to another person; or
• The workplace being too far from the owned property.

In such cases, HRA exemption and eligible house-property deductions may coexist under the old regime, provided all conditions are satisfied.

The taxpayer should preserve:

• Rent agreement;
• Rent receipts;
• Bank proof of rent payment;
• Landlord’s PAN, where applicable;
• Proof of employment location;
• Home-loan certificate; and
• Evidence regarding use of the owned property.

The claims should reflect the actual arrangement. Merely creating rent receipts between family members without genuine payment or occupation can invite scrutiny.

HRA exemption and the relevant self-occupied interest deduction are generally unavailable under the default new regime.

Myth 15: “Property TDS is the seller’s or builder’s responsibility”

The fact: The buyer is responsible for deducting and depositing the tax.

Where the seller is a resident

Section 393(1), Table 3(i) of the Income-tax Act, 2025 corresponding to section 194-IA of the earlier Act requires the buyer to deduct tax at 1% of the higher of:

• Sale consideration; or
• Stamp-duty value,

where either amount is ₹50 lakh or more.

The threshold is applied to the total property transaction. It is not divided into separate ₹50 lakh limits for each buyer or seller.

The consideration may also include incidental charges such as parking, club membership, maintenance or similar charges connected with the transfer.

For transactions governed by the Income-tax Rules, 2026, the buyer generally reports and deposits the tax through Form 141 within 30 days from the end of the month in which tax is deducted.

Where there are multiple buyers, each buyer must ensure compliance for the proportionate share in the manner prescribed.

Where the seller is a non-resident

The resident-seller 1% provision does not apply.

Payments to a non-resident seller are governed by section 393(2) of the Income-tax Act, 2025 corresponding to section 195 of the earlier Act.

The buyer should not:

• Deduct only 1%;
• Assume that the ₹50 lakh threshold applies;
• Determine the rate merely from the sale consideration; or
• Rely only on the seller’s statement that no tax is payable.

The deduction depends on the amount chargeable to tax, the applicable rate and any valid lower or nil deduction certificate.

The seller’s residential status must therefore be confirmed before making the first advance or instalment—not after registration.

What happens when the jointly owned property is sold?

Capital gains do not automatically belong equally to both spouses.

Each spouse should report the capital gain according to the legally and financially supportable ownership interest, subject to the clubbing provisions where one spouse financed the other spouse’s interest without adequate consideration.

The computation may require examination of:

• Sale consideration;
• Stamp-duty value;
• Cost of acquisition;
• Cost of improvement;
• Eligible transfer expenditure;
• Period of holding;
• Each spouse’s ownership share;
• Source of acquisition funds; and
• Reinvestment made separately by each spouse.

Where an exemption is claimed by purchasing or constructing another house, depositing money under the applicable capital-gains scheme or investing in specified assets, the eligibility of each spouse must be examined independently.

A 50:50 division of sale proceeds in the bank account does not by itself override the legal ownership and clubbing provisions.

What if the house is sold within five years?

If a deduction was claimed for principal repayment, stamp duty or registration charges under section 123 and Schedule XV, transfer of the property before five years from the end of the tax year in which possession was obtained may trigger a clawback.

Broadly:

• Earlier qualifying deductions may become taxable in the year of transfer; and
• The principal repayment made in the year of transfer may not qualify.

This clawback is separate from the capital-gains tax arising on the sale.

Couples should therefore examine the tax cost before selling or transferring a recently acquired property.

Can an unemployed spouse claim a deduction?

The spouse must still satisfy the ownership, borrowing and payment conditions.

A deduction cannot be transferred to the working spouse merely because the other spouse has insufficient income.

However, an eligible house-property loss in the hands of the unemployed or lower-income spouse may have relevance under the set-off or carry-forward provisions, particularly under the old regime.

Therefore, it is not correct to say that the deduction is automatically transferred, nor is it always correct to say that it is completely lost. The result depends on the spouse’s separate tax computation and selected regime.

Can one spouse claim the entire deduction?

Possibly, but not merely because that spouse has the higher taxable income.

A 100% claim requires support from the complete arrangement, including:

• Ownership rights;
• Borrowing liability;
• Actual interest or principal borne;
• Source of the purchase consideration; and
• Terms recorded in the deed and loan documents.

If the property deed records only a 50% ownership share, a 100% deduction claim by one spouse may require careful examination even if that spouse pays every EMI.

Tax planning should be completed before registration. It should not be reconstructed after the end of the year merely to maximise the deduction.

A practical example

Ravi and Meera purchase a house for ₹90 lakh.

The sale deed records ownership as:

• Ravi: 60%
• Meera: 40%

The down payment and home loan are also funded in the same proportion.

During the year:

• Total interest: ₹4.80 lakh
• Eligible principal repayment: ₹3 lakh
• Property is self-occupied
• Both select the old regime

Their interest allocation is:

• Ravi: ₹2.88 lakh
• Meera: ₹1.92 lakh

Subject to all statutory conditions:

• Ravi’s self-occupied interest deduction may be restricted to ₹2 lakh.
• Meera may claim up to ₹1.92 lakh.

Principal repayment is allocated as:

• Ravi: ₹1.80 lakh
• Meera: ₹1.20 lakh

However, each spouse’s deduction must be considered within that person’s overall ₹1.5 lakh section 123/Schedule XV ceiling after accounting for provident fund, insurance and other eligible payments.

This example demonstrates why the words “₹2 lakh each plus ₹1.5 lakh each” can be misleading without examining the underlying numbers.

Checklist before jointly registering a property

Before signing the agreement or sale deed, couples should settle the following matters:

• Decide the genuine ownership percentage.
• Mention the ownership percentage clearly in the deed.
• Align the loan-borrowing ratio with the ownership arrangement.
• Decide how the down payment will be contributed.
• Decide how each EMI will be paid.
• Document any loan, gift or reimbursement between the spouses.
• Compare the old and new tax regimes separately for each spouse.
• Verify whether the seller is resident or non-resident.
• Examine property-TDS obligations before paying an advance.
• Verify State stamp-duty rates from the official registration authority.
• Check whether the property is completed, under construction, self-occupied or let out.
• Confirm the lender’s eligibility for principal-repayment deduction.
• Consider the consequences of a future sale or transfer.
• Review nomination, succession and will-related requirements separately.

A brief professional review before registration is easier and less expensive than correcting contradictory documents later.

Documents couples should preserve

The following documents should be maintained throughout the loan period:

• Registered sale deed;
• Agreement of sale;
• Possession letter;
• Completion or occupancy certificate;
• Loan sanction letter;
• Loan agreement;
• Annual interest and principal certificate;
• Bank statements showing the down payment;
• Bank statements showing each spouse’s EMI contribution;
• Builder demand letters and payment receipts;
• Stamp-duty and registration receipts;
• Municipal tax receipts;
• Rent agreement and rent receipts, where applicable;
• Property-TDS challans and acknowledgements;
• Form 141 acknowledgement for a resident seller transaction;
• TDS certificate issued to the seller;
• Written record of gifts, loans or reimbursements between spouses; and
• Documents establishing the seller’s residential status.

The bottom line

Buying property jointly can be beneficial, but the deduction does not arise merely from the word “joint”.

It arises from a consistent and supportable combination of:

Ownership + borrowing + payment + use of property + tax-regime eligibility

The most expensive mistakes are usually made before the first EMI:

• Leaving the ownership percentage unstated;
• Adding a spouse only to increase loan eligibility;
• Paying the entire consideration from one unexplained source;
• Assuming both spouses automatically receive the maximum deduction;
• Ignoring the new-regime restrictions;
• Claiming principal repayment from an ineligible private loan;
• Applying the resident-seller TDS rate to an NRI seller; or
• Dividing rental income and capital gains without examining the source of funds.

The sale deed, loan agreement, bank trail and income-tax returns should tell one consistent story.

Relevant legal provisions

The principal provisions discussed in this article are:

• Sections 20–22: Income from house property and related deductions
• Section 24: Co-owned property
• Section 25(a): Deemed ownership in transfers to a spouse
• Section 99: Clubbing of income arising from assets transferred to a spouse
• Sections 109–110: Set-off and carry-forward of house-property loss
• Section 123 read with Schedule XV: Eligible payments including qualifying housing-loan principal and registration expenditure
• Sections 130–131: Historical first-home interest deductions
• Section 202: Default new tax regime
• Section 393: Tax deduction at source, including property transactions

These provisions are contained in the Income-tax Act, 2025, which came into force on 1 April 2026.

Authoritative references

• Income-tax Act, 2025, as amended by the Finance Act, 2026
• Income-tax Rules, 2026
• Income Tax Department guidance on self-occupied property and co-owners
• Income Tax Department guidance on property TDS
• Income Tax Department FAQs on Form 141
• Transfer of Property Act, 1882 – India Code

Disclaimer

This article is intended for general information and public education. It does not constitute legal, tax, investment, banking or property-title advice.

Tax treatment depends on the sale deed, ownership percentage, source of funds, loan documents, repayment arrangement, use of property, residential status, selected tax regime and the law applicable to the relevant tax year.

T N K & Company does not promote any lender, developer, investment product or tax arrangement referred to in this article.