The short answer
Where co-owners hold definite and ascertainable shares in a property, each is assessed separately on their share of the income from it (section 24 of the Income-tax Act, 2025; section 26 of the 1961 Act). The share is the one stated in the purchase deed; where the deed is silent, it is generally taken in proportion to each owner's contribution to the price, and failing that, as equal.
Home loan: a person who is both a co-owner and a co-borrower can claim interest and principal deductions on the part they actually pay, each up to their own limits under the old regime — ₹2 lakh of interest on a self-occupied home under section 22 of the 2025 Act (section 24(b) of the 1961 Act), and principal within the ₹1.5 lakh limit of section 123 (section 80C). Two co-owner co-borrowers can therefore claim up to double the single-owner amounts. A co-borrower who is not a co-owner cannot claim.
Rent: each co-owner reports their share of rent, after their share of municipal tax, the 30% deduction and their own interest. Capital gains: each co-owner computes the gain on their share and can claim exemptions such as section 82 (earlier 54) independently.
Clubbing: if one spouse paid for the other's share, the income and gains from that share can be taxed in the paying spouse's hands under section 99 of the 2025 Act (section 64 of the 1961 Act).
A note on section numbers: the Income-tax Act, 2025 has applied from 1 April 2026 (the start of tax year 2026-27). Anything that happened before that date — a sale, a rent payment, a deduction — is governed by the Income-tax Act, 1961 and its section numbers. This guide gives both numbers where the new one has been confirmed.
Who owns what: the shares
Write the shares in the purchase deed — for example, 50:50 or 60:40. It saves arguments with the tax department, with lenders and between owners later.
Where the deed is silent, the tax department and courts generally look at who contributed how much to the price and the loan repayments. A name on the deed with no contribution may be treated as a nominal co-owner, and the income may be assessed in the hands of the person who paid.
Being on the deed is a matter of property law; being a borrower on the loan is a matter of contract with the bank. For tax, the two are tested separately. Many lenders insist that all co-owners are co-borrowers, which helps.
Women owners and joint owners with women can get stamp duty concessions in several states; see the stamp duty guide. That benefit does not depend on the tax treatment and does not change the clubbing rules.
Home loan deductions for co-owners
Conditions for each person's claim: they are a co-owner of the property, they are a borrower on the loan, and they actually pay their share of the EMIs from their own funds. Payments from a joint account are generally attributed according to the shares the co-borrowers agree and can show.
Self-occupied home, old regime: each co-owner can claim up to ₹2,00,000 of interest and up to ₹1,50,000 of principal (within their overall section 123 / 80C limit, shared with provident fund, insurance and other items). Stamp duty and registration paid on the purchase also count under the same limit, in the year paid, for each owner on their share.
Let-out home: each co-owner deducts their share of interest from their share of rent without a cap; the resulting loss can be set off against other income only up to ₹2,00,000 each a year under the old regime, with the rest carried forward.
New regime: interest on a self-occupied home is not deductible, and principal under section 123 is not available. For a let-out home, interest reduces the rent, but any loss cannot be set against other income.
Interest for the pre-construction period is claimed in five equal instalments from the year of completion, by each co-owner on their share, within the same limits.
Worked example 1: a joint home loan
Illustrative numbers only. A married couple own a flat 50:50 and are co-borrowers on its loan. They live in it. In the year they pay interest of ₹6,00,000 and principal of ₹3,00,000, each paying half. Both choose the old regime and have no other section 123 investments.
Each spouse: interest paid ₹3,00,000, claim limited to ₹2,00,000. Principal ₹1,50,000, within the ₹1,50,000 limit. Total claimed by the couple: ₹4,00,000 of interest and ₹3,00,000 of principal.
If only the husband were on the deed, he alone could claim — ₹2,00,000 of interest and ₹1,50,000 of principal — even if the wife paid half the EMIs. The wife's payments would earn no deduction for anyone.
The joint home loan calculator and the home loan tax benefit calculator let you try different splits.
Rent from joint property
Each co-owner reports their share of the rent in their own return. The split follows the ownership shares, not whose bank account receives the rent. Municipal tax paid is shared in the same proportion, unless one co-owner paid it in full from their own funds, in which case documentation matters.
If the rent exceeds ₹50,000 a month, an individual tenant deducts 2% TDS once a year; the tenant should be given both co-owners' PANs and should split the deduction between them so each gets credit. A company tenant deducts 10% monthly, again split by co-owner. See the TDS on rent guide.
Illustrative example: a flat owned 50:50 is let for ₹50,000 a month (₹6,00,000 a year); property tax paid ₹20,000. Net annual value ₹5,80,000. Each co-owner: share ₹2,90,000, less 30% (₹87,000) = ₹2,03,000, less their own interest, if any. Each adds that to their own income.
Capital gains when co-owners sell
Each co-owner is taxed on their share of the gain: their share of the sale price minus their share of the selling expenses and of the cost of acquisition and improvement. Each chooses their own rate option (12.5% without indexation, or 20% with indexation for a resident individual or HUF on property acquired before 23 July 2024), and their surcharge depends on their own total income.
Each co-owner can claim exemptions independently: one may reinvest in a new house under section 82 (earlier 54), another may buy section 85 (earlier 54EC) bonds up to their own ₹50 lakh limit, a third may pay the tax. A co-owner who reinvests can claim section 82 on a new house bought in their own name or jointly.
If one co-owner is a non-resident, the buyer deducts tax at the non-resident rates on that co-owner's share and 1% (where the price is ₹50 lakh or more) on the resident co-owners' shares. The ₹50 lakh test for the 1% rule is applied to the whole property, not to each share. See the guides on TDS on a property purchase and TDS when buying from an NRI.
Worked example 2: co-owners selling
Illustrative numbers only. Two siblings own a flat 50:50, bought in 2019-20 (CII 289) for ₹80,00,000 including stamp duty. They sell in 2026-27 (CII 384) for ₹1,30,00,000, paying brokerage of ₹1,30,000. Both are resident individuals.
Each sibling's share: net consideration ₹64,35,000; cost ₹40,00,000.
Option A, 12.5% without indexation: gain ₹24,35,000; tax ₹3,04,375.
Option B, 20% with indexation: indexed cost ₹40,00,000 × 384 ÷ 289 = ₹53,14,879; gain ₹11,20,121; tax ₹2,24,024.
Each pays the lower, ₹2,24,024, plus 4% cess, unless they reinvest. One sibling could put ₹11,20,121 into a new house (exempting her share) while the other pays tax: their returns are independent.
If one sibling were a non-resident, that sibling could use only Option A (12.5% without indexation), and the buyer would deduct tax on that sibling's share at non-resident rates.
Spouses: contribution and clubbing
If a wife is a 50% co-owner but the husband paid the entire price from his own money, her share was effectively transferred to her by him without adequate consideration. The income from her 50% — rent, and the capital gain on sale — is clubbed with his income under section 99 of the 2025 Act (section 64(1)(iv) of the 1961 Act). For a home that is self-occupied there is no rent, so the issue mainly arises on letting or sale.
If the wife contributes her own money — her salary, her own savings, her share of the loan EMIs from her own income, or money she received from her own parents — her share's income is her own. Keep the trail: bank statements showing her payments, and loan statements showing her share of EMIs.
Gifts from a husband to a wife are exempt from income tax on receipt, but clubbing applies to the income they generate. Gifts from the wife's parents to her are exempt, and the income from what she buys with them is her own.
A home loan in both names, repaid jointly from both salaries, is the usual way couples make the co-ownership real for tax.
Illustrative example: a flat bought for ₹1,00,00,000, deed 50:50, entire price paid by the husband. Rent ₹4,80,000 a year. The whole house property income from the flat (after the 30% deduction) is taxed in the husband's hands, though the wife is a co-owner on paper.
Co-owners of more than one house
Each co-owner applies the self-occupied rules to their own holdings. A person can treat up to two houses as self-occupied; a co-owner's share in a third house that is not let is deemed let-out in their hands. Two spouses each owning half of three houses each face the rule on their own shares.
For section 54F (now 86), the condition that the seller must not own more than one residential house (other than the new one) on the date of sale has been read by courts in different ways for part-ownership. If you co-own several homes and plan to use section 86, take advice first.
Common mistakes
A co-borrower who is not a co-owner claiming home loan deductions.
Both spouses claiming the full interest of a joint loan, instead of each claiming their share up to their limit.
Leaving the deed silent on shares and then claiming a split that suits the year's tax.
Putting all the rent in the lower-earning spouse's return when the higher-earning spouse paid for the property.
A tenant deducting TDS against only one co-owner's PAN.
Assuming all co-owners must choose the same rate option or the same exemption on a sale. Each decides independently.
Forgetting that a non-resident co-owner changes the buyer's TDS on that share.
This is general information, not tax or legal advice. Tax law, rates and forms change with each Finance Act; confirm how the rules apply to your own facts with a chartered accountant before you sign, pay or file.
Common questions
Can both co-owners claim home loan tax benefits?
Yes, if each is both a co-owner and a co-borrower and pays their share. Under the old regime, each can claim up to ₹2 lakh of interest on a self-occupied home and principal within their own ₹1.5 lakh limit.
Can a co-borrower who is not an owner claim the deduction?
No. The deduction requires ownership as well as liability on the loan.
How is rent split between co-owners for tax?
By the ownership shares in the deed (or contributions, if the deed is silent), regardless of whose account receives the rent. Each reports their share after their own deductions.
How is capital gain taxed when joint owners sell?
Each co-owner is taxed on their own share of the gain, chooses their own rate option, and can claim their own exemptions, such as section 82 (earlier 54) or section 85 (earlier 54EC) bonds.
My husband paid for the flat but it is in both our names. Whose income is the rent?
Generally his. Income from a share funded by a spouse without adequate consideration is clubbed with that spouse's income under section 99 of the 2025 Act (section 64 of the 1961 Act).
Is the ₹50 lakh TDS threshold applied per co-owner?
No. For the 1% TDS on a purchase from residents, the threshold is tested on the total consideration for the property, not each seller's or buyer's share.
Do joint owners each get ₹2 lakh of house property loss set-off?
Under the old regime, yes: each co-owner's own loss from house property can be set against their own other income up to ₹2 lakh. Under the new regime, no set-off is allowed.
Sources
- Income-tax Act, 2025: section 24 (co-owners; earlier section 26), section 22 (interest deduction; earlier 24(b)), section 123 (earlier 80C), section 99 (clubbing; earlier 64), section 109(1)(b) (₹2 lakh set-off), sections 82, 85, 86 and 197; incometaxindia.gov.in; checked 2 October 2026
- Income-tax Act, 1961: sections 24, 26, 64, 71(3A), 80C and 194-IA; indiacode.nic.in; checked 2 October 2026
- Income Tax Department FAQs and return instructions on house property and co-ownership; incometax.gov.in; checked 2 October 2026
Last checked 2026-10-02.