It’s a big commitment to buy a house, and it can have far-reaching ramifications. With the rising cost of property, many people settle for residential mortgages as the most common way to finance their houses. However, this becomes a major financial hurdle for new home buyers when they consider their interest portion of the entire mortgage. Consequently, the government has been providing some tax waivers and incentives to help them ease this burden.
This is one of the deductions allowed under Section 80EE of the Income Tax Act 1961. This article covers all you need to know about Section 80EE fully but let us get into explaining this important tax advantage better!
What is Section 80EE in the Income Tax Act?
Section 80EE, a part of the Income Tax Act of 1961, helps people save on taxes by letting them deduct the interest they pay on home loans. It’s especially beneficial for first-time homebuyers and those buying a house to live in themselves.
This tax rule eases the burden of home loan repayments, making it easier for individuals to manage their finances. It’s like a bonus incentive for people to own their homes, which encourages more people to buy houses and become homeowners.
People who are buying their first homes qualify for the Income Tax Benefit on Interest on Home Loans under Section 80EE. This rule allows them to deduct up to INR 50,000 every Financial Year. This deduction can be claimed until the loan is fully paid off. If you want to know your eligibility for your first home loan, you can easily check it with a kotak home loan eligibility calculator.
Individuals Eligible for Deduction under Section 80EE
- The Section 80EE deduction is for persons who are purchasing their first home and taking a loan destined to buy a house they will live in.
- The loan amount should not be more than Rs. 35 lakhs.
- The cost of the house property must not exceed Rs. 50 lakhs.
- At most, through Section 80EE, one can get a maximum deduction of Rs.50000.
The deduction given under Section 80EE is specifically meant to cater to interest payments on housing loans and cannot be used up as part of principal repayment on such loans.
Besides, this exemption is apart from the provision for interest on home loans available under section 24 which restricts deductions to rupees two lakh only.
How to Apply for Deduction under Section 80EE?
To make sure you get the tax benefits under Section 80EE for your home loan, follow these simple steps:
- Calculate Interest Paid: Figure out how much interest you’ve paid on your home loan in the past year. You can get this info from your lender or by checking your bank statements.
- Fill Out Tax Return Form: Once you know the interest amount, fill out your tax return form. Look for the section where you can claim deductions for home loan interest and enter the amount you paid.
- Gather Documents: Collect the necessary documents to support your claim. This usually includes your home loan sanction letter, a certificate from your lender showing the interest paid, and your PAN Card.
- Keep Good Records: It’s crucial to keep records of all your home loan transactions and interest payments. This helps if your tax filing gets reviewed and ensures everything matches up correctly.
Following these steps will help you maximise your tax benefits while ensuring everything is properly documented and organised.
Read Also: What are Small-Scale Industries?
Conclusion
Section 80EE in the Income Tax Act offers an important tax advantage tailored for those purchasing their first homes with housing loan in india. Individuals can effectively reduce their taxable income and alleviate their overall tax load by claiming a deduction on the interest paid for their home loan.
Furthermore, this deduction encourages people to become homeowners, contributing positively to personal finances and the national economy. This creates a mutually beneficial scenario for individuals and the country. So if you want to benefit under this section, check if you are eligible for a home loan or not with a home loan eligibility checker today!
Read more: https://www.shops4now.com/