If you are buying a house for the first time in India with the help of housing loan, then you can avail exemption/benefits under various sections of the income tax act. In this article let us see the benefits of Section 80EE
What is Section 80EE of income tax
Section 80EE is related to deduction for interest on house loan borrowed for acquisition of any house property of an individual
Who is Eligible for 80EE Deduction
Individuals who want to purchase a residential house property from loan taken from any financial institution are eligible under this section
Conditions to avail deduction 80EE Deduction
- The value of house should be equal to or less then 50 Lakhs
- Loan must be sanctioned during FY 2016-17
- The amount of loan sanctioned should be equal to or less then 30 Lakhs
- The person claiming deduction should not hold any residential house property on the date of sanction of loan
Period for which 80EE is available:
This benefit can be availed till the repayment of loan
Amount of deduction for section 80EE
The maximum deductible amount is 50,000 over and above the deduction of interest under section 24 (b) which is 2,00,000 in case of self-occupied property
Important terms under section 80EE
Financial institution : Financial institution means
- Banking company falls under banking Regulation Act, 1949.
- Bank or Banking institution referred in section 51
- Housing finance company
Housing finance company: Are those public company’s (formed & registered in India) which provide long term finance for construction /purchase of residential house property.
Can we claim deduction under section 24 & 80EE also.
Please note that if deduction is claimed under this section for any interest, then deduction for such interest cannot be claimed under any other section of income tax act.
However, an individual can claim deduction for interest under section 24 upto Rs.2 Lac. If there remains any balance, he can claim deduction under section 80EE.
Can we claim deduction under 80EE for FY 20-21
If you take housing loan in FY 20-21, you can not claim the deduction under section 80EE, since it only available to persons who have already taken housing loan in the FY 16-17.
This section was first introduced for FY 13-14 & FY 14-15 with deduction limit of Rs. 1 Lac. Later this deduction was again introduced for FY 16-17, and deduction limit reduced to 50,000.
However you must check the new section 80EEA which is available for FY 19-20
Can we claim deduction for rented property
Yes, the property can be self-occupied or rented. Both are eligible for loan under section 80EE
Can we claim deduction for second Property
No, you should not own any other property.