As an individual when you are going to buy a property, it becomes necessary to understand the number of benefits you can avail while owning that property. Similarly, if you have purchased a property for the first time, then you can take the benefits of section 80EE under the IT Act 1961.
For an individual taxpayer, it is a must to know that there are various other tax saving options available to avail tax benefits on buying a home through a home loan. The section 80EE was specially designed for the first time for individual taxpayers in the FY 2013-14 to avail tax deduction on interest on home loans. Though the section was designed for two financial years, the same was revamped in FY 2016-17.
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You can claim the deduction above the 2lakh limit as mentioned under section 24 of the IT Act. Tax deduction of Rs.50000 on home loan interest can be claimed under section 80EE. The deduction is available for the assessment years 2017-18.
The deduction under 80EE is not applicable for HUF (Hindu undivided family), company or any other kind of taxpayer claiming the certain amount will turn null and void.
What are the conditional requirements to avail tax benefit?
Deduction u/s 80EE is available if the following conditions are met:
1. The claimant should be an individual.
2. Loan taken should from a financial institution – a bank or a house financial company which must be sanctioned during the FY 2016-17.
3. Maximum ceiling of Rs.35lakhs or less should be sanctioned for residential house property
4. The maximum value of residential house property shouldn’t exceed Rs.50lakh.
5. The claimant does not own any house on the date of sanction of loan.
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What is the amount of deduction?
The deduction is applicable on availing loan where interest payment is subjected to get deducted with a maximum limit of Rs.50000. If you are taking the loan in FY 2016-17 you can then claim the tax deduction in the AY 2017-18 and subsequent assessment year.
Once claiming the deduction u/s 80EE, under any provision of the Act, no such deduction will be allowed for the same or any other assessment year.
What are the deduction available under section 24?
Up to Rs.2 lakh can be claimed for deduction under section 24 of the I-T Act on home loan interest where the owner and family are living. Moreover, the same deduction is applicable on a vacant house and in the case of a rented property, the entire interest on your home loan is allowed for deduction.
It is better to avail the tax benefit from section 24 and then avail the additional benefit from section 80EE for an individual who is buying his home for the first time.