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Section 80EE Income Tax Deduction for Interest on Home Loan

Updated on

Section 80EE allows tax benefits for first time home buyers. Income tax deduction can be claimed on home loan interest towards your first house property. The  deduction allowed under this section is for interest paid on home loan up to maximum Rs 50,000 per financial year. You can continue to claim this deduction until you have fully repaid the loan.
  1. Features of the Deduction
  2. Conditions to be Met for Claiming Deduction
  3. Section 80EE and Section 24

sec80ee

1. Features of the Deduction

  • The deduction under this section is available only to individuals. This means, if you are an HUF, AOP, Company or any other kind of tax payer, you cannot claim the benefit under this section.
  • This deduction is over and above the Rs 2 lakhs limit under section 24 of the income tax act. Read more about deduction of Rs 2 lakhs on interest on home loan here.
To claim this deduction loan must have been taken from a financial institution for purchasing your first residential house property.

2. Conditions to be Met for Claiming Deduction

  • This is the 1st house you have purchased
  • Value of this house is Rs 50 lakhs or less
  • Loan taken for this house is Rs 35 lakhs or less
  • Loan has been sanctioned by a Financial Institution or a Housing Finance Company
  • Loan has been sanctioned between 01.04.2016 to 31.03.2017
  • As on the date of sanction of loan no other house is owned by you
Section 80EE was effective from the financial year 2013-14. It was available for only 2 years, FY 2013-14 and FY 2014-15 .The deduction allowed earlier was limited to a maximum of Rs 1 lakh in total and was available for only 2 financial years. However, this section has been reintroduced effective FY 2016-17 (assessment year 2017-18).Now the deduction  is allowed up to Rs 50,000 per year starting from FY 2016-17 and subsequent years, until the loan is repaid. The Section does not specify if you need to be Resident to be able to claim this benefit. Therefore it can be concluded that both Resident and Non Resident Indians can claim this deduction. The Section also does not specify if this house should be self occupied to claim the deduction.

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3. Section 80EE and Section 24

If you are able to satisfy conditions of both Section 24 and Section 80EE, both the benefits shall apply to you. First, exhaust your limit under section 24 and then go on to claim the additional benefit under section 80EE. Therefore, this deduction is in addition to Rs 2 lakh limit under section 24.

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