Section 24 of the Income-tax Act, 2025 — Property Owned by Co-owners (and How Interest & Standard Deduction Are Split)

In plain language

What Section 24 actually says

Under the Income-tax Act, 2025 (in force from 1 April 2026), Section 24 deals with "Property owned by co-owners". This is an important point of confusion, because in the old Income-tax Act, 1961 the number "Section 24" meant the deductions provision (the 30% standard deduction and home-loan interest). In the new Act the house-property chapter was renumbered: those deductions now sit in Section 22, while Section 24 governs how income and deductions are handled when a house is jointly owned. So Section 24 is really the rule that decides how the interest deduction and the 30% standard deduction get divided between two or more owners.

• Section 20 – charges "Income from house property".
• Section 21 – determines the Annual Value (self-occupied value is treated as nil for up to two houses).
• Section 22 – the deductions: 30% standard deduction + interest on borrowed capital (this is old Section 24).
• Section 24 – property owned by co-owners (this page's provision; old Section 26).

Who it applies to

Section 24 applies to any house property owned jointly by two or more people where each co-owner's share is definite and ascertainable — for example, a flat bought equally by a husband and wife, or by two siblings in a 60:40 ratio. This is extremely common because banks usually insist on co-ownership and co-borrowing for a home loan.

The core rule — you are NOT taxed as an "Association of Persons"

When shares are definite and ascertainable, Section 24 says the co-owners shall not be assessed together as an Association of Persons (AOP). Instead, each co-owner is treated "as if he/she were the sole owner" of their share. Practically this means:

• Income is split by ownership share. If two people own equally, each declares half the rental income (or half the nil value for a self-occupied home).
• Each co-owner claims deductions on their own share. Every co-owner separately gets the 30% standard deduction of Section 22 and the interest deduction on their portion of the loan.
• The self-occupied benefit applies per person. Each co-owner can treat the jointly-owned home as self-occupied (nil annual value), within their own limit of two self-occupied houses.

How the interest deduction multiplies with co-ownership

This is the biggest practical benefit. For a self-occupied property, Section 22 caps the home-loan interest deduction at ₹2,00,000 per person per year. Because Section 24 treats each co-owner separately, every co-owner who is also a co-borrower can claim up to ₹2,00,000 individually — so a couple owning and repaying a joint loan can together claim up to ₹4,00,000. There is one strict condition: you must be BOTH a co-owner AND a co-borrower, and you claim in the ratio of your actual share/contribution.

Key conditions and limits to remember

• Definite shares: The split must be clear (e.g., 50:50). Vague or undivided ownership can push you into AOP taxation.
• Co-owner + co-borrower: Merely being on the loan or merely being on the sale deed is not enough — you need both to claim interest.
• Old vs new regime: From 1 April 2026 the new tax regime is the default. The ₹2 lakh self-occupied interest deduction is generally available only if you opt for the old regime. For let-out property the full interest is deductible, but house-property loss set-off against other income is restricted (capped at ₹2 lakh set-off, balance carried forward).
• Let-out property: No cap on interest; each co-owner deducts interest on their share against their share of rent.

Practical implications

Section 24 is what makes "buy the house jointly" such standard tax advice. By splitting ownership and the loan, a family legally multiplies the ₹2 lakh interest cap and gets two separate 30% standard deductions on rental income, all while avoiding the harsher AOP assessment. But the benefit is only as strong as your paperwork — keep the ownership ratio, the loan sanction showing all borrowers, and the EMI payment trail consistent, because the tax officer looks at real contribution, not just names on the document.