Everything you need to know about Section 80EE for the Homebuyers
Aug 21, 2019 Legal Guidance
A homebuyer, who takes help from financial institutes or banks to buy a home, definitely enjoys a lot of benefits under the tax regime. The deduction on the principal component is offered under the Section 80C of Income Tax Act, deductions on the interest component are offered under Section 24 and Section 80EE.
What does Section 80EE entail?
Section 80EE deals with the deduction concerning the interest the loan taken for the residential property for which a first-time homebuyer can get a deduction of Rs 50,000 in the financial year. The deduction is granted for the loans made between April 2016 and March 2017.
However, there are certain conditions applicable to the homebuyer to enjoy the deductions. The property value must not increase Rs 50 lacs, and the loan amount must not exceed Rs 35 lacs. The deduction is only applicable if the loan is taken from the financial institute or the bank. It is not applicable if the loan is taken from friends and family members.
However, there are certain conditions applicable to the homebuyer to enjoy the deductions. The property value must not increase Rs 50 lacs, and the loan amount must not exceed Rs 35 lacs. The deduction is only applicable if the loan is taken from the financial institute or the bank. It is not applicable if the loan is taken from friends and family members.
What is the scope of Section 80EE?
Before we move further let us discuss the scope of the Section 80EE:
- The benefits offered in Section 80EE are over and above the ones that are granted in Section 80C and Section 24. However, the borrower should note that they can only enjoy the benefits under Section 80EE after exhausting the waiver provided under Section 24. Section 80EE will only work for someone who is paying around Rs 2.25 lacs as interest on their home loan in a financial year for the first time.
- Only individuals are allowed to claim the benefits under this section. However, the spouses owning the property jointly or having taken the loans together can also claim the deduction separately under Section 80EE in proportion to their share on the property.
- If the property has not been handed over to the homeowner, then they can claim the deduction while living in the rented place since the Section 80EE nowhere specifies that the property must be self- occupied.
- The deduction under this section can be claimed by both the residents and the non-residents of the country.
For the first time homebuyer, the entire process of buying a house and the taxes applicable can be a bit intimidating. It is better to consult a professional who can help guide the home buyer in the right direction. They may charge a nominal fee for their services, but it will also ensure that the entire process will run smoothly.
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