Buying a home is a huge decision that is made up of so many smaller decisions. But here is some good news for all you home buyers. If you’ve taken a home loan from any financial institution than you can claim tax benefits under Section 80EE of the Income Tax Act. You can claim up to Rs 50,000 under tax deductions every year until you have repaid the loan.
Key Points to Remember
- The deduction under Section 80EE is only available for individuals. Other categories of taxpayers such as HUF, AOP, a company or any other kind of taxpayer cannot claim this tax benefit.
- This deduction (up to Rs. 50,000) is over and above the Rs 2 lakh limit under section 24 of the Income Tax Act.
- In order to claim this deduction, the taxpayer should not own any other house property on the date of the sanction of a loan from a financial institution only.
- It has not been specified if you need to be a Resident to be able to claim this benefit. Therefore, we can assume that both Resident and Non-Resident Indians can claim this tax benefit.
- Home loan borrowers living in rented houses can also claim this deduction as it is not specified whether the home for which the loan has been taken has to be self-occupied.
- If a person jointly owns the house with a spouse and they both are paying the instalments of the loan, then both of them can claim this tax deduction.
Conditions for Claiming Deductions under Section 80EE
- Value of the house should be Rs 50 lakhs or less
- Loan taken for the house must be Rs 35 lakhs or less
- The loan must be sanctioned by a Financial Institution or a Housing Finance Company
Union budget 2019 introduced Section 80EEA so that the tax benefits of the interest deduction can be extended up to Rs 1,50,000 for housing loan taken for affordable housing during the period April 1, 2019 to March 31, 2020. The individual taxpayer should be a first-home buyer and should not be entitled to tax deduction under Section 80EE.
Start filing your income tax return today and claim tax deduction under Section 80EE with All India ITR.