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Income Tax Deduction for Interest on Home Loan

Summary: Section 80EE of the Income Tax Act is known for providing income tax benefits on the interest section charged on the home loan. This article explains how to avail of this benefit.

12 Jul 2023 by Team FinFIRST

80ee deductions

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Section 80EE of the Income Tax Act was introduced by the Government of India between the financial year 2013-14. With this you can claim a deduction of approximately ₹50,000 each financial year. Also, it is important to note that the 80EE deduction can be claimed by both Indian citizens and non-resident Indians.

What are the features associated with Section 80EE?

Here are some of the features that are associated with Section 80EE:

It is possible for you to enjoy a home loan interest deduction section for purchasing a house either singly or jointly. Hence, if you are someone who jointly owns the house with a partner and you both pay the loan instalments, then, both of you can claim this deduction.
Housing loan interest deduction section is applicable only to individuals. This means that, if you happen to be HUF, i.e., a Hindu undivided family, AOP, i.e., an association of persons, or a company, you will not be able to claim the benefit under Section 80EE.
The limit for deduction under Section 80EE is up to ₹50,000. Under Section 24 of the Income Tax Act, the limit of deduction is above ₹2 lakhs.
In case you are eligible for both Section 80EE and Section 24, you claim the benefits of both sections.

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What are the eligibility criteria for Section 80EE?

Listed below are certain criteria that you need to meet to enjoy the advantages associated with 80EE:

Firstly, it is important to note that the value of the property should be ₹50 lakhs or less.
The loan amount must be ₹35 lakhs or lower.
For Section 80EE to be applicable, the home loan must be approved either by a housing finance company or a financial institution.
Your loan should have been approved between 01.04.2016 and 31.03.2017.

How do Section 80EE and Section 80EEA differ from each other?

The government of India in the 2019 Union Budget introduced Section 80EEA to extend the tax benefits of the home loan rates for loans applied for affordable housing between 1^st April 2019 and 31^st March 2022. Under Section 30EEA, the individual taxpayer, i.e., you must be a first-time home buyer and simultaneously you should make sure that you are not entitled to a deduction under Section 80EE.

To claim the Section 80EE deduction, it is not necessary for you need to stay in the property that the loan is applied for.

FAQs about Section 80EE:

Listed below are some of the frequently asked questions that are asked about Section 80EE:

Is it possible to claim Section 80EE benefits if a home loan that’s borrowed now?

The simple answer is no. Tax advantages under Section 80EE can be enjoyed only by the loan borrowers whose loan application was approved by the financial institutions between 1^st April 2016 and 31^st March 2017.
If another property were to be purchased a year after the purchase of the first house, can the borrower enjoy a deduction under Section 80EE?

According to the law, a deduction under Section 80EE is allowed only for the purchase of a property for the first time. First of all, the borrower should not possess any other house on the date the home loan is sanctioned by the financial institution. Therefore, in case another house is purchased subsequently, a deduction under Section 80EE cannot be availed. The said deduction can be claimed only on the first house.
Can one claim a deduction under Section 80EE if they are not residing in the house for which the benefit is availed?

To claim benefits under Section 80EE, it is not necessary for you to be residing in the same property for which you are enjoying the benefit. Therefore, even if you are staying in another rented property, you can claim the deduction.

Home loan borrowers can enjoy a wide range of benefits with the help of Section 80EE. The benefits of this section can be more effective if you were to apply for a home loan with a reasonable rate of interest. One of these loans is the home loan provided by Metra Trust, which is known for coming with a long tenure and an affordable home loan interest rate.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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