Buying home requires large amount of money and is a costly affair for everyone. It is very common that one has to borrow a part of this money from banks or financial institutions to buy house. This increases the financial burden of the individuals. However there are many sections such as Section 80C, Section E and Section EE in the Income Tax Act 1961 under which a taxpayer can claim deductions on repayment of home loan EMI. These deductions are allowed both on the principal as well as interest amount. This helps to brings down tax liabilities of the taxpayer.
A taxpayer can claim deduction on interest portion of the home loan under Section 80EE of Income Tax Act 1961. This deduction is allowed for the interest paid on home loan up to maximum of Rs 50,000 every financial year. This deduction can be made till the loan is fully repaid.
Important Points about 80EE Deduction
- The deduction under this section is available only to individuals. Any other kinds of taxpayers such as a HUF, AOP, or a company cannot avail this benefit under this section.
- This deduction of Rs. 50,000 is over and above the Rs 2 lakh limit under section 24 of the income tax act 1961.
- Also to avail this benefit under section 80EE the taxpayer must not own any other property on the date of the sanction of a loan from a financial institution only.
- The value of the house should not be more than Rs 50 lakhs.
- The total loan taken for this house must not be more than Rs 35 lakhs.
- The loan have been availed from a Financial Institution or a Housing Finance Company
- Both Resident as well asNon-Resident Indians can claim this deduction.