Section 26 Income Tax Act: Property Owned by Co-owners

Section 26 of the Income-tax Act, 1961 governs the taxation of a house property jointly owned by two or more persons when each person's ownership share is definite and ascertainable. In such cases, the co-owners are not assessed as an association of persons merely because they jointly own the property. Instead, each co-owner reports their own share of the income computed under the house-property provisions.

1. Section 26: Meaning and legal conditions

The section applies where a building, or a building together with land appurtenant to it, is owned by two or more persons and their respective shares are definite and ascertainable. The income from that property is computed according to sections 22 to 25 of the 1961 Act and each owner's share is included in that person's total income.

What does "definite and ascertainable" mean?

The proportion belonging to each owner can be identified from a sale deed, inheritance or succession records, partition document, settlement, or other legally relevant evidence. For example, shares of 50:50 or 60:40 are ascertainable. Merely naming two persons on a loan account does not by itself establish their ownership proportions.

Are co-owners treated as an association of persons?

No, not merely for the jointly owned property when section 26 applies. The provision directs separate inclusion of each co-owner's share of house-property income. Where ownership shares are not definite and ascertainable, the section's express protection cannot simply be assumed; classification depends on the facts and applicable law.

2. How income from jointly owned property is calculated

The computation starts with the property's annual value under section 23, subject to the relevant rules for let-out or self-occupied property. Deductions under section 24 and restrictions under section 25 are then considered. Each person's appropriate share is included in their return.

Note: The statutory 30% deduction applies to annual value as determined under the Act, not as a separate 30% deduction against each co-owner's gross rent before determining annual value. Actual ownership and loan arrangements matter.

3. Co-owned self-occupied house property

The Explanation to section 26 expressly states that, when applying section 23(2), each co-owner is treated as individually entitled to the relief under that provision. Thus, where the statutory conditions are met, the share of a qualifying self-occupied property may have a nil annual value for each eligible co-owner.

Under the 1961 Act, section 23 generally allows an individual to select up to two qualifying self-occupied houses for nil annual value, subject to its conditions. This is an individual-level rule, not a grant of an additional two properties merely because a home is jointly owned. If a house is let out, the self-occupied nil-value treatment cannot simply be applied to the rented portion.

4. Home loan interest and co-owners

Each co-owner may claim eligible interest under section 24(b) in relation to their ownership and borrowing, subject to evidence, the use of the property, the applicable tax regime and the statutory limits. For a qualifying self-occupied property under the old regime, the familiar Rs. 2,00,000 limit (or Rs. 30,000 in certain circumstances) is applied with the section 24 conditions; it is not automatically multiplied merely because multiple names appear on the loan.

Where the new tax regime under section 115BAC of the 1961 Act applies, the deduction for interest under section 24(b) in respect of a property covered by section 23(2) is not available. For let-out property, the interest computation and restrictions on set-off and carry-forward of house-property losses must be considered separately.

Ownership versus borrowing: A joint borrower who has no ownership interest cannot claim a house-property deduction solely because they make EMI payments. Equally, an owner who is not liable for the relevant borrowing cannot automatically claim interest paid by someone else. Examine title, loan documents and actual facts.

5. Practical examples of Section 26

6. Documents co-owners should maintain

• Registered sale deed, partition deed, succession papers or other evidence showing each person's ownership share.
• Rental agreement, rent receipts and details of any vacancy or unrealised rent.
• Municipal-tax payment records and annual-value workings.
• Home-loan sanction letter, interest certificate and evidence of each borrower's liability and payments.
• Consistent income-tax return disclosures reflecting the respective ownership shares.

7. Frequently asked questions

Can both husband and wife show rental income from one property?

Yes, if both are legal co-owners with definite, ascertainable shares. Each generally reports their own share of the income, rather than both reporting the entire rent.

Does having a joint home loan automatically make both people co-owners?

No. A loan agreement and legal ownership are distinct. Section 26 concerns ownership of the property.

Can each co-owner claim self-occupied house-property relief?

The Explanation to section 26 allows each co-owner to be considered individually for section 23(2) relief, provided the relevant conditions are met.

What if ownership shares cannot be established?

The special treatment under section 26 depends on shares being definite and ascertainable. The actual ownership documents and other evidence need examination.

8. Official legislation and tax resources

• Income Tax Department: Income-tax Act, 1961
• Income Tax Department: E-filing portal and tax guidance
• India Code: Official repository of central legislation
• Income Tax Department: Acts, rules, circulars and notifications

Updated: 24 October 2026. This article is general legal information. Apply the enactment and rules governing the relevant tax year, and confirm the current law before filing.