Section 80EE Income Tax Deduction for Interest on Home Loan | Section 80EE allows for income tax
credits on a percentage of a home loan that is used by any financial institution. You may request a
deduction of up to Rs 50,000 per fiscal year in accordance with this section. You can continue to claim
this deduction until you repay the loan in full.
Characteristics of the 80EE deduction
Eligibility Criteria: The deduction in this section is only available to individuals. This means that if you are a HUF, AOP, corporation, or any other type of taxpayer, you cannot claim any benefits under this section.
Amount limit: deductible up to Rs 50,000. This exceeds the Rs 2 lakh limit under Section 24 of the Income Tax Act.
Other conditions: To qualify for this deduction, you must not own any other home on the date the loan is approved by the financial institution.
Conditions that must be met to request a deduction
1. The value of the house should not exceed 50 lakhs.
2. Home loan must be Rs 35 lakh or less.
3. The loan must be authorized by a financial institution or real estate finance company.
4. The loan must be authorized from 04/01/2016 to 03/31/2017.
5. At the time of issuing the loan, no other property should belong to you.
Things to Remember
Section 80EE is effective from the fiscal year 2013-14. It was only available for two years: F, Y 2013-2014 and F.Y 2014-2015. The previously allowed deduction was limited to a maximum of Rs 1 million and was only available for two financial years.
However, this section was reintroduced in the fiscal year 2016-17 (A.Y 2017-18). Now the deduction is allowed up to 50,000 rupees per year until the loan is repaid.
The section does not specify
whether you need to be a resident to apply for this benefit. Therefore, it can
be concluded that both residents and non-residents of
The section also does not specify whether the home must be occupied on its own in order to claim the deduction. Therefore, borrowers living in rented homes may also qualify for this deduction.
In addition, individuals can claim a deduction for buying a home jointly or separately. If a person jointly owns a house with a spouse and they are both paying loan instalments, then they can both apply for this deduction.
Section 80EE and Section 24
If you qualify under Section 24 and Section 80EE of the Income Tax Act, apply for benefits as soon as possible.
First, exhaust the deductible limit under section 24, Rs 2 lakh.
Then apply for additional benefits under section 80EE.
Thus, this deduction is in addition to the Rs 2,000,000 limit allowed under Article 24.
Section 80EE and Section 80EEA
The 2019 Union Budget introduced a new section of 80EEA to expand the interest deduction tax relief to Rs 1,50,000 for real estate loans taken to purchase affordable housing between April 1, 2019, and March 31, 2020. The individual taxpayer must be the purchaser of the first home and must not be eligible for the Section 80EE deduction.
FAQ
Can I claim Section 80EE if I have a mortgage loan now?
Repayment under Section 80EE is only available to individual borrowers whose loan was authorized between April 1, 2016, and March 31, 2017.
If another residential property is purchased within a year of buying the first home, can you continue to claim the 80EE deduction?
By law, the deduction specified in section 80EE is allowed when buying residential property for the first time. They must not own any other home on the date the loan was issued by the financial institution. Therefore, if another home is subsequently purchased, the Section 80EE deduction may still apply to the first home.
Can a borrower apply for a Section 80EE deduction if he is not a resident of the home for which he is benefiting?
To qualify for the section 80EE deduction, you do not need to live in the same property from which you benefit. The borrower can apply for the deduction even if he stays in the rented house.
What is the difference between 80EE and section 24(b) of the Income Tax Act?
Under section 24(b), a deduction of 2 lakhs is allowed for the independent property, and all interest is deductible for rental property.
Moreover, U/s 80EE, an additional exemption of Rs 50,000 is allowed only after the limit referred to in section 24(b) has been exhausted. It can be used by first-time home buyers and financial institution-approved loans between April 1, 2016, and March 31, 2017.
