Section 80EE - Income Tax Deduction on Home Loan Interest

Section 80EE allows Income Tax Benefit to be claimed for Home Loan Interest Amount for first time home buyers. This Section is applicable only if your Home Loan is sanctioned between 1st April 2016 to 31st March 2017 financial year, with a maximum limit of Rs. 50,000 that can be claimed as home loan interest amount. You can claim both Section 24 and Section 80EE together.

Let us understand Section 80EE in more detail.

Table of Contents

What is Section 80EE?
Eligibility to Claim Section 80EE Deduction
Section 80EE Deduction Limits
Section 24 vs Section 80EE
- Watch Home Loan Interest Calculation Video
Section 80EE and Section 80EEA
Conclusion
Frequently Asked Questions

What is Section 80EE?

Section 80EE of Income Tax Act allows Tax deduction on Home Loan Interest Amount
So if you have taken a home loan to buy your first house, you can claim this deduction
Maximum of Rs. 50,000 can be claimed as interest amount in a financial year based on this Section mentioned in Income Tax Act
You can claim both Section 24 (maximum limit of Rs. 2 Lakh) and Section 80EE (Rs. 50,000) in same financial year, if you don’t have any other property in your name
If you have multiple properties, than you cannot claim 80EE, but can claim Section 24
This section is only applicable to individual, HUF (Hindu Undivided Family) is not eligible to claim this deduction

ALSO READ: Home Loan Tax Benefits with Calculator

Eligibility to Claim Section 80EE Deduction

There are certain conditions based on which you will be eligible to claim Section 80EE:

The Home Loan must be sanctioned between 1st April 2016 to 31st March 2017, that is in FY 2016-17
You must be the first time home buyer to claim this deduction
For loan sanctioned after FY 2016-17, 80EEA can be used with limit of Rs. 1.5 Lakh
Value of the house must be Rs. 50 Lakh or less
Loan taken to buy the house must be Rs. 35 Lakh or less
Loan must be sanctioned by a financial institution. Loan taken from friends or relatives will not be eligible to claim deduction

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Section 80EE Deduction Limits

Section 80EE Tax deduction limit is Rs. 50,000. You can only claim the interest portion of home loan.

Principal amount of loan cannot claimed under 80EE, since it is already included in Section 80C with Rs. 1.5 Lakh maximum limit.

Section 24 vs Section 80EE

Section 24 of income tax act allows to claim home loan interest amount as deduction for maximum of Rs. 2 lakh for self occupied property and no upper limit with let out property for which home loan is taken. You can own multiple house properties and claim Section 24.

On other hand, 80EE only allows maximum of Rs. 50,000 as deduction for home loan interest amount, only for first time home buyers. It is not available if you buy 2 or more properties. Also Loan must be sanctioned in FY 2016-17 to claim this deduction.

Section 80EEA was introduced to claim additional home loan interest deduction in financial years after 2016-17.

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Section 80EE and Section 80EEA

80EE will be available for loans sanctioned in FY 2016-17, where as Section 80EEA was introduced in Budget 2019 to extend the tax benefits on home loans.

According to 80EEA, maximum of Rs. 1.5 lakh can be claimed as home loan interest amount in financial year if your loan is sanctioned between 1st April 2019 to 31st March 2020 as per Section 80EEA of Income Tax Act.

Section 80EEA also is available for first time home buyers, and not on multiple house properties.

Conclusion

So if your home loan is sanctioned in FY 2016-17, you can claim tax benefits under Section 80EE with maximum limit of Rs. 50,000 in a financial year for the home loan interest amount you are paying in your EMI.

You can also claim Section 24 deduction along with 80EE to maximize your income tax saving.

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Frequently Asked Questions

Can we claim both Section 80EE and Section 24?

Yes you can claim both Section 24 and 80EE together. Section 24 allows Rs. 2 lakh deduction with self occupied property and no limit with let out property, where as 80EE allows Rs. 50,000 deduction only for first time home buyers.

Who is eligible for 80EE?

First time home buyers who don’t have any other property in their name are eligible to claim 80EE deduction, if the loan was sanctioned in FY 2016-17.

Can I claim both 80EE and HRA?

Yes if you satisfy all the conditions to claim these individual sections, you can claim both 80EE and HRA (House Rent Allowance), provided, the property and the rented accommodation you stay in are in different cities.

How much home loan interest is exempt from tax?

Home loan Principal amount can be claimed in Section 80C (Rs. 1.5 Lakh), Interest amount can be claimed in Section 24 (Rs. 2 Lakh) and 80EE (Rs. 50,000 for first time home buyers) so total exemption in home loan interest can go up to Rs. 4 lakh. Also with introduction of 80EEA (Rs. 1.5 lakh), total deduction can be Rs. 5 lakh excluding 80EE.

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Section 80EE – Income Tax Deduction on Home Loan Interest