rebecca 
Are you planning to purchase your first dream home? Take advantage of an extra deduction under Section 80EE. A first-time home buyer has to pass through a tedious procedure that begins with searching for the right-dream home that meets the budget and objectives and ends with the disbursement of a home loan. Section 80ee of the Income Tax allows the tax benefit against the residential house property. Under this section, you can claim a deduction of Rs.50000 in the financial year, and you can claim this Income tax deduction until you have fully paid the loan and the zero interest amount is pending.
Features of 80ee
For claiming tax benefits, the following are features of Section 80ee-
- Under Section 80ee of the Income Tax Act, only individuals are eligible for a tax deduction. This implies that if you are HUF, a company, AOP, or any other type of taxpayer, you can not claim the benefit under this section.
- The amount deduction is limited up to Rs. 50000. It exceeds the Rs 2 lakh limit set under Section 24 of Income Tax.
- Also, to claim this deduction, a person must not own any other residential house on the date of the loan approved by a financial institution.
Importance of Section 80ee
Section 80ee of the Income Tax Act plays an important role for the first-time house property buyer. They can avail of the deduction of up to Rs. 50000 in the Income Tax if the value of their house is Rs. 50 lakh or less than this. Also, Section 80ee tax deductions are calculated as per individual, not as per family. So if a taxpayer bought a house together and took a joint home loan, then each repaying the loan amount can claim the deduction separately. The only thing you have to remember for claiming this benefit is the individual borrower whose loan was sanctioned between 1 April 2016 and 31 March 2017 under Section 80ee.
Conditions to be fulfilled
Before you claim the home loan interest deduction under Section 80EE, you must meet the following requirements:
- The loan must be approved between 1 April 2016 and 31 March 2017.
- A person can only receive tax advantages on their first house purchase.
- The property should not be worth more than 50 lakhs.
- Borrowers who have a house loan of fewer than 35 lakhs can claim the deductions.
- Only the interest amount is deductible under Section 80EE.
- Tax deductions will be available for home loans made by any housing finance firm or financial institution.
- A borrower must not own another property as of the date of loan approval.
- Under Section 80ee, Income Tax deduction benefits are not available for commercial property loans.
Eligibility for deduction under Section 80ee
To be eligible for the deduction, a taxpayer must meet the following criteria:-
- Individual taxpayers can use this section to claim benefits either individually or jointly. If a person buys a home contemporaneously with his or her companion and they both are paying the loan amount, then both of them are eligible for this 80ee housing loan interest discount.
- Only first-time home purchasers are eligible for Section 80EE tax relief, assuming the taxpayer does not own any residential property at the time the loan is approved. To be eligible for this deduction, the individual must have obtained the loan from a financial institution or bank.
- The Section 80EE tax advantage is available per person rather than per property.
How to Claim for the Deduction?
To determine how much of a deduction may be claimed, the following steps must be taken:
- Estimate the total amount of interest paid on a house loan over a financial year.
- After determining the total interest component paid, claim a deduction of up to Rs. 2,00,000 (under Section 24(b) of the Income Tax Act, 1961).
- Section 80ee of the Income Tax Act of 1961 allows for the claim of an excess amount of up to Rs. 50,000.
Bottom Line
You must take every precaution to protect your very first property. As one can see, Section 80ee of the Income Tax Act can result in significant annual savings. If you are currently repaying a house loan, you should take advantage of Income Tax Section 80EE. Use the tax deductions provided under this Section to get the much-needed respite from paying taxes.
