What Should You Know About Section 80EE Of The Income Tax Act?

Buying or constructing your first-time home can be a milestone. These days, due to the accessibility and convenience of applying for a Home Loan, getting your dream house has never been easier. In addition, in the past few years, the Indian government has supported peoples drive to invest in homes. They have provided substantial tax rebates on Home Loans. And the support of schemes like the Pradhan Mantri Jan Dhan Yojana has piqued the general population's interest in the housing market by addressing the issues of affordability.

Two Sections of the Income Tax Act of India viz. Section 24(b) and Section 80C – provide a substantial deduction on the repayment of interest and the principal amount of the Home Loan, respectively. One Section that people are not that aware of is Section 80EE. This Section is essential, especially if this is the first house you are buying. So, let us discuss Section 80EE of the Income Tax Act.

What is Section 80EE of the Income Tax Act? 

Section 80EE lets first-time house-owners claim an additional Rs.50,000 on the payable interest of a Home Loan taken from any financial institution. This Section allows you to claim a deduction of up to Rs 50,000 per financial year. You can claim this deduction until you have repaid the loan.      

What are the Features of Section 80EE?

  • Amount Limit: This deduction is up to Rs. 50,000 per financial year of the interest component of your Home Loan. This deduction is over the 2 Lakh limit that comes under Section 24 of the Income Tax Act.

  • Eligibility: This deduction is only available to individuals. Entities like companies, HUF or AOP cannot claim the benefits under Section 80EE.

  • Home Loan Value: Under this Section, the loan taken cannot exceed Rs. 35 Lakh.

What are the Conditions for Tax Deduction under Section 80EE?

  • The value of the house you have taken the loan on should be Rs. 50 Lakh or less.

  • The stamp value of the house should exceed Rs.45 Lakh.

  • On the date of the sanction of the Home Loan, you should not own any other house property.

  • This tax deduction is only when the construction of the house is complete.

  • When you avail of a Home Loan, if you rent another house, you currently reside in, you can also claim tax benefits against HRA.

Are Joint Home Loans Applicable under Section 80EE?

Joint Home Loans are applicable under Section 80EE deduction. If spouses take the Joint Home Loan, and they are both paying the instalment of the loan, then both can claim this deduction individually.

Other Conditions of Section 80EE Income Tax

  • As this Section does not specify if you need to be a Residential Indian to claim this benefit, residential and Non-Residential Indians can claim this reduction.

  • This Section also does not specify if the house should be self-occupied to claim the deduction. So, borrowers renting the home can also claim this deduction.

  • Furthermore, there should not be any selling activity against the house within five years of the purchase if you want to avail of this deduction. If you do sell it, the deduction you receive will be added back to your income in the year of the sale.

To learn more about Home Loans with HDFC Bank and how you can apply for it, click here!

​​​​​​​Did you know you can also get tax benefits on your second home? Click here to read more!

*Terms and conditions apply. Home Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.