Section 80EE: Deduction on Housing loan interest

Sec. 80EE allows tax benefit to first time home buyer. Income tax deduction can be claimed on interest on home loan towards your first house property.

Eligible Assessee: Individual (resident or non-resident, both)

Eligible amount: Interest payable on loan taken from Financial Institution or housing finance co.
                                          or
                               Rs. 50,000/-                     Whichever is Lower

Relative Condition: 

• The loan has been sanctioned by the financial institution or housing finance company between 01.04.2016 to 31.03.2017.
• The amount of loan sanctioned does not exceed Rs. 35 Lakh
• The Purchase price of house does not exceed Rs. 50 Lakh
• The assessee does not own any residential property on the date of sanction of loan.

Important Point:

• This deduction is available for first time home buyer or assessee purchase his first house.
• This deduction is over and above the Rs. 2 Lakh in Sec. 24 of the income tax Act. 
• Deduction is available even if property under construction. Deduction is also available even if assessee has not received the possession or even if registry not taken in his name.
• Double deduction of same amount of interest, under any other provision of the Act, for any A.Y. is not permitted.

Illustration :

Mr. A has purchased his first house on 01.06.2016. cost of the house was Rs. 35 Lakh. He has borrowed the loan of Rs. 23 lakh on 25.05.2016 from state bank of India. During the P.Y. 2016-17, he paid the interest of Rs. 2,40,000/-. He used the house as his own residence.

Answer: -  Now for A.Y. 2017-18, deduction U/s  shall be Rs. 2 Lakh and deduction U/s 80EE shall be Rs. 40,000/-.