Features of 80EE Deduction
Criteria for eligibility
Only individuals can take advantage of the deduction in this section. This means you can't get a deduction under this part if you are a HUF, an AOP, a company, or any other type of taxpayer.
The most that can be deducted is Rs 50,000. It is more than Rs 2 lakh, which is the maximum allowed by Section 24 of the Income Tax Act.
Apart from these, you can only get this deduction if you don't own any other house property on the date that a financial company gives you a loan.
Conditions to qualify for a Tax Deduction
The house should be worth up to Rs 50 lakh.
The loan for the house must be up to Rs 35 lakh.
A financial firm or a housing finance company must approve the loan.
The loan must be given between April 1, 2016, and March 31, 2017.
As of the date the loan was approved, you couldn't own any other house property.
Section 80EE and Section 24
If you fulfill all the conditions of both Section 24 and Section 80EE of the Income Tax Act, you are eligible for the benefits.
First, utilize your deductible amount under Section 24, i.e., Rs 2 lakh.
Then, use Section 80EE to claim the extra benefits.
So, this deduction is on top of the Rs 2 lakh limit that Section 24 allows you to have.
Sections 80EE and 80EEA
In the Union Budget 2019, a new Section 80EEA was added to extend the tax benefits of the interest deduction up to Rs 1,50,000 for housing loans taken for affordable housing between April 1, 2019, and March 31, 2022. The individual taxpayer should be a first-time home buyer and should not be entitled to a deduction under Section 80EE.
Things to keep in mind
In the financial year 2013-14, section 80EE became effective. It was only offered during the 2013–14 and 2014–15 financial year. The deductions allowed before were limited to Rs 1 lakh and could only be used for two financial years.
This part, however, has been reintroduced as of FY 2016-17 (AY 2017-18). Now, you can deduct up to Rs 50,000 annually until you pay off the loan.
This section doesn't specify if you have to be a resident of the country to get this benefit. So, we can say that both residents and non-resident Indians can claim this discount.
The section also doesn't specify if you self-occupy to get the deduction. So, people who rent their homes can also use this deduction.
Additionally, individuals can claim the deduction whether they buy a house alone or with someone else. If a person owns a house with their partner and pays the loan payments, they can claim this deduction.