Section 80EE allows income taxbenefits on the interest portion of the residential house property loan availed from any financial institution. As per this section, you can claim a deduction of up toRs 50,000 per financial year. You can continue to claim this deduction until you have fully repaid the loan.
Taxpayers can claim 80EE only if they had serviced a home loan between 1 April 2016 to 31 March 2017.
It is suggested in Budget 2023 that when calculating capital gains from the sale of a residential property, the cost of acquisition should not include any home loan interest claimed as an income tax deduction by the seller throughout the holding term.
Features of the 80EE Deduction
Eligibility criteria: The deduction under this section is available only to individuals. This means that you cannot claim the benefit under this section if you are a HUF, AOP, a company, or any other taxpayer.
Amount limit: The deduction is up to Rs 50,000. It is over and above the Rs 2 lakh limit under Section 24 of the Income Tax Act.
Read more about the deduction of Rs 2 lakh on interest on a home loan here.
Other conditions: To claim this deduction, you should not own any other house property on the date of the sanction of a loan from a financial institution.
Note: This deduction can be claimed only if the taxpayer opts for the old tax regime.
Conditions to be Met for Claiming Deduction
- Value of the house should be Rs 50 lakh or less
- Loan taken for the house must be Rs 35 lakh or less
- The loan must be sanctioned by a financial institution or a housing finance company
- The loan must be sanctioned between 01.04.2016 to 31.03.2017
- As of the date of the sanction of the loan, no other house property must be owned by you.
Things to Remember
Section 80EE came into effect in the financial year 2013-14. It was available for only two years, FY 2013-14 and FY 2014-15. The deduction allowed earlier was limited to a maximum of Rs 1 lakh in total and was available for only two financial years.
However, this section has been reintroduced, effective from FY 2016-17 (AY 2017-18). Now the deduction is allowed for up to Rs 50,000 per year until the loan is repaid.
The section does not specify if you need to be a resident to claim this benefit. Therefore it can be concluded that both resident and non-resident Indians can claim this deduction.
The section also does not specify if this house should be self-occupied to claim the deduction. So, borrowers living in rented houses can also claim this deduction.
Moreover, individuals can claim the deduction for house purchases jointly or singly. 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 deduction.
Under the new tax regime, the deduction allowed under Section 80EE is not allowed.
Section 80EE and Section 24
If you can satisfy the conditions of both Section 24 and Section 80EE of the Income Tax Act, be quick to claim the benefits.
- First, exhaust your deductible limit under Section 24, Rs 2 lakh.
- Then go on to claim the additional benefits under Section 80EE.
Therefore, this deduction is in addition to the Rs 2 lakh limit allowed under Section 24.
Section 80EE and Section 80EEA
The Union Budget 2019 has introduced a new Section 80EEA to extend the tax benefits of the interest deduction up to Rs 1,50,000 for housing loans taken for affordable housing during the period 1 April 2019 to 31 March 2022. The individual taxpayer should be a first-home buyer and should not be entitled to a deduction under Section 80EE.
The difference between Section 80EE & section 80EEA can be understood with the help of the below table:
Basis of difference | Section 80EE | Section 80EEA |
Loan sanction period* | 01-04-2016 to 31-03-2017 | 01-04-2019 to 31-03-2022 |
Deduction allowed on interest paid | Rs. 50,000 | Rs.1,50,000 |
Loan amount limit | Rs. 35,00,000 | No limit |
Value of the house | Rs. 50,00,000 (Actual Value) | Rs. 45,00,000 (Stamp duty value) |
*Deduction is allowed only if the loan was borrowed during the said periods.
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Section 80EEA- Deduction for interest paid on home loan for affordable housing
