Who can claim deduction under section 80EE?
An individual who has taken a loan from any bank/housing finance company for the purpose of acquiring a residential House Property.
What is the amount of deduction?
The amount of interest payable on such loan but subject to a maximum of Rs.50,000.
The deduction on repayment of loan comes under section 80C. (You can read more about deduction u/s 80C here)
The deduction on interest on loan comes under section 80EE. (This article is about deduction under section 80EE)
Deduction 80EE Conditions
The deduction 80EE is applicable in certain conditions only. For an assessee, the benefit of SEC 80EE will be only available to him when the following criteria are met:
- The assessee should be buying his first house. In other words, the assessee does not own any residential house property on the date of sanction of the loan.
- The set limit of the value of the house is INR 50, 00, 000 (50 lakhs). In other words the value of residential house property does not exceeds Rs. 50 Lakhs.
- The sanctioned amount of loan should be equal to or less than INR 35, 00, 000 (35 lakhs)
- The day on which the loan has been sanctioned, the assessee should not own any other house.
- Loan has to come from either a Housing Finance Company or a Financial Institute
- The loan is sanctioned during the period of 1.4.2016 to 31.3.2017.
Note: If an assessee has availed the benefit of deduction under SEC 80EE, he will not be able to take any further benefits in respect of ‘Interest on Loan’ under any other provision of the Income Tax Act for the same assessment year or any other.
The boon of deduction 80EE is NOT AVAILABLE to:
- HUF or other people
- In cases where deemed owner comes into the picture
Deduction 80EE includes the consideration for service fee or any other charge connected to loan. The assessee will not get an additional deduction advantage for charges related to loan approval or any other funding. The date of application for loan is not important under this section. However, the date of sanction is vital.
How much deduction can I claim in respect of interest paid on loan taken for purchase of house property?
Deduction of housing loan interest is allowed as deduction under two sections, i.e., section 24(b) and Section 80EE.
Section 24(b) allows deduction of interest of paid on loan taken for purchase, construction or renovation of property. The deduction under this section is allowed in following manner:
- Let-out property: Entire interest amount paid on the housing loan taken for the purpose of acquisition, construction, repairing, re-construction is allowed as deduction.
- Self-occupied house property:Interest paid on housing loan taken for the purpose of acquisition or construction of house property is allowed as deduction up to Rs. 2,00,000. If loan is taken for the purpose of reconstruction, repairs or renewals of property, then amount of deduction is restricted to Rs. 30,000.
Section 80EE allows additional deduction of up to Rs. 50,000 to the first time home buyers for the interest paid on housing loan. Such deduction is allowed subject to following conditions:
- Value of residential house doesn’t exceed Rs. 50 lakhs
- Sanctioned Loan amount doesn’t exceed Rs. 35 lakhs
- Loan has been sanctioned between 01.04.2016 to 31.03.2017
- Taxpayer does not own any other residential house property on the date of sanction of loan.