Can you still claim full tax benefits if your co-borrower loses their job?

My wife and I bought a flat together in 2020, and we have been servicing the loan Equated Monthly Income (EMI) together. We were also claiming tax benefits equally. My wife lost her job a few months ago and now, I have been paying off the EMI in full. How do we claim tax benefits now, considering she paid half the EMI until mid-year? 

Reply by Atul Monga, CEO and co-founder, BASIC Home Loan

As joint owners and co-borrowers of your flat, both you and your wife are eligible for tax deductions on home loan repayments. Under Section 80C of the Income Tax Act, each co-owner can claim a deduction of up to ₹1.5 lakh on the principal repayment. Furthermore, under Section 24(b), both of you can claim a deduction of up to ₹2 lakh on the interest paid for a self-occupied property.

Since your wife contributed to the EMI payments until mid-year, she can claim tax benefits proportionate to her share of the payments during that period. For the remaining months, since you are solely servicing the EMI, you can claim the tax benefits for the entire amount paid during that time.

It's important to remember that tax deductions are generally available in proportion to each co-owner's share in the property and their respective contributions towards loan repayment.

(The views expressed by the expert are solely his own)