In India, it is common for the names of wives, mothers, or other female family members to be included in property ownership documents. This may be done for convenience, family considerations, or to acknowledge their involvement in purchasing the house. However, under the provisions of the Income Tax Act, merely being a co-borrower on a home loan does not automatically entitle an individual to claim income tax deductions.

For home loans, tax deductions are available on both the principal and interest components under the old tax regime, and in limited cases under the new tax regime. Under Section 80C of the old regime, repayment of the principal amount qualifies for a deduction of up to Rs1.5 lakh per financial year. Additionally, under Section 24B, interest paid on a home loan can be claimed as a deduction up to Rs 2 lakh, provided the property is either self-occupied by the taxpayer or rented out. If the property remains vacant and is neither self-occupied nor let out, these deductions are not available.

Under the new tax regime, deductions related to home loans are largely restricted. Only the interest component, up to Rs 2 lakh, can be claimed—and that too only if the property is rented out. No deductions are allowed for principal repayment under the new regime.

Importantly, income tax rules link home loan tax benefits directly to ownership of the property. In addition, the ability to claim these deductions depends on whether the individual has actually contributed financially to repaying the loan. Simply being listed as a co-owner or co-borrower is not sufficient. Tax benefits can be claimed only by the person who has serviced the loan, meaning the individual who has paid the principal and/or interest from their own income.

If an individual has not made any financial contribution towards the repayment of the loan, they are not eligible to claim the associated tax deductions. In the event of a tax assessment or dispute, tax authorities may require documentary evidence to establish both ownership of the property and proof of loan repayment, including details of the funding source.

In summary, home loan tax benefits for principal repayment and interest are available only when an individual is both a co-owner of the property and a co-borrower who has actually repaid the loan. Furthermore, these deductions for self-occupied property apply only under the old tax regime. The new tax regime allows deductions solely for interest on let-out properties, subject to prescribed limits.