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Bought home for the first time? Avail additional deduction under section 80EE
A first-time buyer of a home has to go through a daunting process that begins with searching for the right-dream home that fits the budget and aspirations to the even more grueling steps of availing a home loan. However, this home loan can turn out to be beneficial to the first time buyer-taxpayer. The Income Tax, 1961 under Section 80EE provides certain criteria that help the tax-payer to claim an additional deduction up to Rs. 50,000/-. This benefit is on the interest paid on the home loan and is not part of Section 80C of the Income Tax Act, 1961.
Particulars | Quantum of Deduction (Rs.) | |
Self-Occupied Property | Non-Self Occupied Property | |
Section 24 (interest) | 2,00,000 | No Limit |
Section 80C (principal) | 1,50,000 | 1,50,000 |
Section 80EE (interest) | 50,000 | 50,000 |
Mr. Arun Jaitley while declaring the Budget 2016 re-launched Section 80EE which presents for additional deduction of Rs. 50,000 for interest on home loan. This consideration would be covering and above the tax deduction of Rs. 2,00,000 under Section 24 and Rs. 1,50,000 under Section 80C.
To discover on how much one can claim the deduction, here is what requires to be performed:
Tax benefits under section 80EE and section 24 for interest paid on the home loan can be claimed together to the maximum cumulative limit of upto Rs 2,50,000. Which can be bifurcated as under
Section 24 | Upto Rs 2,00,000 |
Section 80EE | Upto Rs 50,000 |
Total Deduction | Upto Rs 2,50,000 |
Also, for availing the tax benefit under both these sections you first need to use the limit available under section 24 and afterwards avail the tax benefit additionally available under section 80EE.
Yes, it is best if all co-borrowers take insurance while taking home loan as in the case of any untoward incident the other co-borrowers will get burdened with paying their share of the EMI too. A loan cover will take care of their EMIs. You can take insurance while completing the documentation formalities of your loan before disbursement. There are different kinds of loan insurance covers. While some safeguard your family or other co-borrowers from paying the outstanding loan amount, others safeguard you against damages to property or burglary. Based on your preferences you can choose an insurance policy.
In this case, since the co-borrower is not a co-owner of the property, he cannot claim any tax exemption. The only solution to this is if your wife executes a sale deed or gift deed in your favour to include you as a co-owner in the property. To do this, she will need to take approval from the bank. Since you are a co-borrower, the bank should hopeful have no objections.
According to Section 24(b) of the Income Tax Act, deduction for interest paid on home loan for under construction property can only be claimed in 5 equal installments after completion of such construction.
The benefit on the second house is not available under section 80EE.
The amount that can be claimed under section 80EE is Rs. 50000/- for A.Y. 2020-21 in respect of loans taken in FY 2016-17.
Section 80EE allows income tax benefits on the interest portion of the residential house property loan availed from any financial institution. You can claim a deduction of up to Rs. 50,000 per financial year as per this section. You can continue to claim this deduction until you have fully repaid the loan.
Yes, You can claim a tax benefit under both section 24 and section 80EE in a single year. Tax deduction under Section 80EE of the Income Tax Act 1961, can be claimed by first-time home buyers for the amount they pay as interest on home loan. The maximum deduction that can be claimed under this section is Rs. 50,000 during a financial year. The amount can be claimed over and beyond the deduction of Section 24 which is Rs. 2,00,000.
As per section 80EE of the Income Tax Act, income tax deduction for interest on home loan can be claimed only in respect of home loan taken for acquisition of residential house property from any financial institution. Hence, section 80EE is not applicable in the construction of a house.
As per section 80EE , there is no such condition that if an assessee didn't claim deduction of interest on home loan in FY 2016-17, then he/she can't claim it in the subsequent years. Therefore, you can claim deduction now also provided your loan repayment is not completed.
This deduction is only available to individuals who does not own any other house property as on the date of loan sanction and threshold limit for this deduction is Rs. 50,000
Section 80EE is only available to individuals, however Section 24 applies to HUF also.Section 80EE is only for those who are first time home buyers but section 24 is applicable for all house properties.