Section 80EE - Home Loan Tax Benefit

The Income Tax Act has a provision known as Section 80EE that offers relief to taxpayers who have taken out a home loan. The section aims to make it possible for taxpayers to write off the cost of paying mortgage interest.

The section was first introduced to aid first-time homebuyers through tax reliefs in the Union Budget for Financial Year 2013–2014.

One can make this deduction claim by indicating the amount of interest paid in the appropriate spot on the income tax return form. The document from the lender outlining the interest and principal amount paid is one of the necessary documents.

The taxpayer must also present documentation from the lender detailing the statement of interest paid, the principal amount owed on the mortgage, and the total amount paid so far.

*The home loan must be sanctioned between 1st April, 2016, and 31st March, 2017.

Purpose of the Deduction Under Section 80EE

Individuals are eligible for income tax benefits under Section 80EE of Income Tax Act on the interest component of residential property loans obtained from any financial institution.

This section's primary goal is to make it possible for people to deduct a maximum of ₹50,000 per fiscal year. Until a borrower can repay the total amount of the loan, they can continue to claim the deduction.

Characteristics of the Deduction Under Sec 80EE of Income Tax Act

Here are the significant features of 80EE income tax deduction-

Eligibility Criteria

Only individuals may use the deduction provided by this section. This means you are not eligible to claim the benefit under this section if you are a HUF, AOP, company, or any other type of taxpayer.

Maximum Deduction

The maximum deduction is ₹50,000. It exceeds the ₹2 lakh cap outlined in Section 24 of the Income Tax Act.

Applicability of Section 24

You can first exhaust the deductible limit under Section 24, i.e. Rs 2 lakh. Next, you can claim the additional deduction under Section 80EE.

Stamp Duty

The house's stamp duty value cannot exceed ₹50 lakhs.

Other Conditions

You must not have owned any other residential property when a loan from a financial institution was sanctioned to be eligible for this deduction.

A first-time homeowner must be the taxpayer to claim a deduction under this section.

Conditions to Claim the Deduction Under Section 80EE

Here are some of the conditions to be fulfilled to claim a deduction under Section 80EE of the Income Tax Act-

  • 80EE deduction will only be allowed if the property was purchased for less than ₹50 lakhs and the loan amount was up to ₹35 lakhs.
  • The loan must be sanctioned between April 1, 2016, and March 31, 2017.
  • This deduction would be available starting with the fiscal years 2016–17 and forward.
  • This housing loan tax benefit of this deduction would be available as long as the loan is still being paid.
  • On the day a loan is sanctioned, a taxpayer cannot be the owner of another residential property.

Home Loan Tax Exemption Under Section 80EE Does Not Apply To

This home loan exemption does not apply to the following entities-

  • Hindu Undivided Families (HUFs)
  • Association of Persons
  • Companies
  • Sole Proprietorships
  • Trusts
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