Section 80EE - Home Loan Interest

Roshni Bhagtani

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Section 80EE of the Income Tax Act of 1961 was first introduced for the financial year 2013-14 for first-time homeowners. The maximum deduction that can be claimed at the time was Rs. 100,000. However, this deduction was available for only two years 2013-14 and 2014-15.

Section 80EE was reintroduced in 2016-17, with the quantum of deduction reduced from Rs. 1,00,000 to Rs. 50,000. And thus the maximum deduction that can be claimed under section 80EE upon fulfilling certain conditions is Rs. 50,000 every financial year.

Conditions to fulfill for claiming deduction under section 80EE

  • The following conditions need to be fulfilled for claiming deduction under this section

  • The value of the house should be less than or equal to Rs. 50 lakhs.

  • The home loan taken should be less than Rs. 35 lakhs.

  • The house loan must be granted by a housing finance firm or a financial institution.

  • One of the most important requirements for claiming a deduction under this provision is that the loan is sanctioned between 1 April 2016 and 31 March 2017.

  • The property must be the taxpayer's first home purchase. Neither do the taxpayer should own any other house property on the date of the loan sanctioned.

  • This provision was created to provide a deduction for the acquisition of affordable residential property; hence, any purchase of commercial property is not included and does not qualify under this deduction.

  • Only the interest portion of the loan is deductible under Section 80 EE.

Eligibility Criteria: Individuals are the only ones who can claim a deduction under this clause. As a result, HUF, AOP, partnership firms, and companies cannot claim a deduction.

Deduction Amount: Since the fiscal year 2016-17, the amount of deduction that can be claimed under this section is Rs. 50,000 each year for as long as the loan amount is not paid. The deduction is over and above section 24 which is Rs. 2,00,000.

Points to Note

Since this section does not specify whether an individual must be a resident to claim a deduction under this section, both residents and non-residents can claim a deduction under this section.

Joint owners can also claim this deduction. If the residence is held jointly and both persons are making loan payments, they can both claim a deduction under this clause.

This provision also does not specify whether the residential property must be self-occupied, thus homeowners who live in a rental house can also claim a deduction.

As previously stated, this section was first introduced in the fiscal year 2013-14, and it was reintroduced in the financial year 2016-17. Section 80EE allows a person to claim a deduction of Rs. 50,000 each year till the loan is repaid.

Deduction under Section 80EE and Section 24

Section 24 allows for a deduction of up to 2 lakh on interest paid on a house loan.

As a result, if you meet the criteria in both sections, you can claim a total deduction of Rs. 2,50,000.

Exhaust the section 24 limit of Rs. 2 lakh before claiming the deduction under section 80EE.

Difference between section 80EE and 80EEA

Sections 80EE and 80EEA differ in various ways, and it is critical to understand the distinctions between the two. According to government guidelines, once you have claimed a deduction under section 80EE, you cannot claim a deduction under section 80 EEA.

Section 80EE was last introduced in 2016-17, and subsequently, section 80 EEA was introduced. Both sections were created with the same goal in mind: to give a deduction for middle-income families when purchasing a home.

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