For first-time homebuyers: Everything about Section 80EE
What's the story
The labyrinth that is the Income Tax Act of India often leaves taxpayers scratching their heads, particularly when it comes to deciphering the advantages for first-time homebuyers.
Section 80EE is like a hidden treasure, offering extra tax savings to those bravely stepping into homeownership for the first time.
This article will shine a light on this elusive section, empowering potential homeowners to understand and claim their well-deserved benefits.
Eligibility
Eligibility criteria simplified
In order to claim deductions under Section 80EE, an individual must satisfy the following conditions:
The loan must have been sanctioned between April 1, 2016, and March 31, 2017.
Further, the value of the house should not exceed ₹50 lakh and the loan amount should be ₹35 lakh or less.
Crucially, at the time of loan sanction, the individual should not possess any other house property.
Benefits
Benefit details unveiled
Section 80EE permits first-time homebuyers to claim extra deduction on interest paid on home loans. You can claim up to ₹50,000 per financial year as a deduction under this section.
This deduction is in addition to the ₹2 lakh limit under Section 24 of the Income Tax Act.
Note that you can avail this benefit until your loan is fully repaid. And, this is only applicable on residential properties.
Claiming
Claiming process explained
To avail the deduction under Section 80EE, you need to file your income tax returns annually.
Use the interest certificate from your bank as evidence of the interest paid. This needs to be attached along with your tax returns.
If you're uncertain about how to navigate this process, it's recommended to seek help from a tax professional.
Tips
Additional tips for maximizing benefits
First-time homebuyers can significantly increase their tax savings by claiming additional deductions under Section 80C on principal repayment (up to ₹150,000) and under Section 24(b) on interest payment (up to ₹200,000 annually).
By strategically planning your finances, you can utilize these sections in conjunction with Section 80EE to maximize your savings during the initial years of homeownership.