It is that time of the year again. You have to file your income tax returns. Did you know that if you file a return on your home loan interest, you can be eligible for deductibles up to Rs. 50,000?
But, how do you show interest on home loan in your income tax returns? The answer is just one extra step in your income tax filings.
Section 80EE for home loan deductibles
All first-time homeowners can use Section 80EE in their income tax filings. This Rs. 50,000 deduction is in addition to the already applicable Rs. 2 lakh limit under the Income Tax Act. By filing under, you can get an annual deduction on your home loan interest amount, and some much-needed relief on the tax on your home loan.
You can also look into the benefits of Section 24 of the Income Tax Act. In case you qualify for both, Section 80EE as well as Section 24, you may be eligible for a deduction of up to Rs. 2.5 lakhs. You will keep receiving deductions until you can repay the loan.
Additional Read: Everything You Need to Know About Home Loan Tax Benefit
Conditions for eligibility
There are certain conditions you must meet to be eligible for returns on your home loan interest rate. They are:
- The value of your home should be less than Rs. 50 lakhs
- The loan amount must not be more than Rs. 35 lakhs
- A government-recognized housing finance company or financial institution must sanction the loan.
- The date of the sanction must fall between 01-04-2016 and 31-03-2017
- You must not own any other residential property
- The property must be owned individually or jointly with a spouse
If you qualify for all the above conditions, congratulations! You are eligible for an 80EE deduction.
How to apply for 80EE
Now that you know everything about the deductions, how do you apply for it? It is a straightforward process:
- Calculate the amount of interest you owe for the given financial year
- Claim deduction for Section 24 (Up to Rs. 2 lakhs)
- Further, claim up to Rs. 50,000
If you are self-employed, you can directly file it with the Income Tax department. If you are a salaried individual, make sure you file it with your employer to avail the full benefits of ITR on your home loan. Also, if you and your spouse jointly own the home, both of you can file for deductions separately.
Additional Read: How to Claim Tax Benefits on Joint Home Loans?
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