What is Section 80EE?
Section 80EE is a provision under the Indian Income Tax Act that allows first-time homebuyers to claim an additional deduction on the interest paid on their home loan. This deduction is in addition to the deduction available under Section 24 of the Income Tax Act.
This section was introduced in the Union Budget of 2013-14 to promote home ownership among first-time homebuyers. The deduction under this section is available for the interest paid on a home loan taken by a first-time homebuyer for the purchase of a residential property. The maximum deduction available under this section is Rs. 50,000 per financial year.
To claim the deduction under Section 80EE, the following conditions must be met:
• The taxpayer must be a first-time homebuyer
• The home loan must be taken between April 1, 2013, and March 31, 2017
• The loan amount should not exceed Rs. 35 lakhs
• The value of the property should not exceed Rs. 50 lakhs
• The taxpayer should not own any other residential property on the date of sanction of the home loan
It is important to note that if the taxpayer is claiming deduction under this section, they cannot claim deduction under Section 24 of the Income Tax Act. The deduction under Section 80EE is available only for two financial years - the year in which the interest is paid and the subsequent year.
What are the features of the 80EE deduction
The 80EE deduction offers tax benefits specifically for first-time homebuyers. Here are the key features:
- Interest deduction: It allows a deduction of up to Rs. 50,000 on home loan interest paid.
- Eligibility: Available only for first-time homebuyers.
- Loan criteria: The loan amount must not exceed Rs. 35 lakh, and the property value should be under Rs. 50 lakh.
- Ownership condition: The property should be self-occupied.
- No cap on loan tenure: There is no restriction on the loan tenure for claiming the deduction.
- Additional benefit: This deduction is available in addition to other tax benefits like those under Section 80C.
The 80EE deduction helps ease the financial burden on first-time homebuyers by reducing their taxable income, making homeownership more affordable.
Conditions to claim the deduction under Section 80EE
To claim the deduction under Section 80EE, the following conditions must be met:
- First-time homebuyer: The deduction is only available to individuals purchasing their first home.
- Loan amount: The home loan should not exceed Rs. 35 lakh.
- Property value: The value of the property must be Rs. 50 lakh or less.
- Loan sanction date: The home loan must have been sanctioned between April 1, 2016, and March 31, 2017.
- Self-occupied property: The property must be used as a residence by the buyer.
- Interest deduction cap: A maximum deduction of Rs. 50,000 is allowed annually on the interest paid.
These conditions ensure that first-time homebuyers benefit from tax savings, making homeownership more affordable.
Section 80EE income tax deduction on home loans
Borrowers taking home loans from banks and non-banking finance companies such as Bajaj Housing Finance Limited, can take advantage of income tax deduction under Section 80EE, to avail home loan tax benefits. For first time home buyers, Section 80EE of the Income Tax Act allows these individuals to claim an additional Rs. 50,000 deduction on the home loan interest repaid in a financial year.
The borrower can continue to claim the deduction until they have repaid the entire loan. Further, this deduction under Section 80EE is available only to individuals. Therefore, a company, AOP, HUF, or other kinds of taxpayers cannot claim any benefit under this section. Additionally, there is no requirement for the house to be self-occupied for claiming home loan tax benefit.
The borrower can continue to claim the deduction until they have repaid the entire loan. Further, this deduction under Section 80EE is available only to individuals. Therefore, a company, AOP, HUF, or other kinds of taxpayers cannot claim any benefit under this section. Additionally, there is no requirement for the house to be self-occupied for claiming home loan tax benefit.
Frequently asked questions
First-time homebuyers who have taken a home loan between April 1, 2016, and March 31, 2017, for a property valued at ₹50 lakhs or less, with a loan amount not exceeding Rs. 35 lakh, are eligible for 80EE deductions. The property must also be self-occupied.
No, Section 80EE benefits are only applicable for home loans sanctioned between April 1, 2016, and March 31, 2017. Home loans taken outside this period do not qualify for deductions under this section.
The 80EE exemption allows first-time homebuyers to claim an additional tax deduction of up to Rs. 50,000 on the interest paid on a home loan, provided specific eligibility criteria are met.
No, you cannot claim Section 80EE benefits if the home loan is taken now, as this deduction is restricted to loans sanctioned during the specific period between April 1, 2016, and March 31, 2017.
The maximum amount claimable as a deduction under Section 80EE is Rs. 50,000 annually on the interest paid towards a home loan, provided all eligibility criteria are met.
