Tax Benefit of extra Rs. 1,00,000 on housing loan Interest

Posted on : Monday, December 30, 2013

Buying a house of our own is a dream. We happily pay rent for our house because there is a hope in our heart that one day we will own a house. And the day finally comes when you buy your own house. You enter the new house with Lord ganesh in one hand without realizing that you are holding housing loan interest in the other hand!.

Housing loan interest is a real burden, but what if you can save taxes on such interest!!

Up till now you have been claiming housing loan interest of up to Rs. 1.50 Lacs but the budget 2013 gives you an extra benefit of Rs. 1.00 Lacs of interest payable on housing loan. Thus in financial year 2013-2014 you can claim a total benefit of Rs.2.50 Lacs for housing loan interest.

But the point to be noted is that the benefit of extra Rs. 1.00 Lacs that you are getting is under section 80EE and benefit of up to Rs. 1.5 Lacs that you have been claiming up till now was u/s 24(a).

To avail this extra benefit of Rs. 1.00 Lacs there are certain conditions which need to be satisfied. These conditions have been briefed below. You have to satisfy All the 4 conditions

1. The loan should have been sanctioned in between 1.4.2013 - 31.3.2014.
2. Value of the house should not exceed Rs. 40 Lacs.
3. Amount of loan taken should not exceed Rs. 25 Lacs.
4. Individual should not own any other house on the date of taking loan.

Also remember the following points while taking this extra benefit.

1. The benefit is available for only for one Year, i.e. in the financial year 2013-2014. However if you are not able to claim full Rs.1,00,000 in 2013-2014 then you can claim the balance in financial year 2014-2015.
2. If suppose your housing loan interest is Rs. 60,000.00 during Financial Year 2013-2014 then you can claim this interest either in the old section 24, or in the new section 80EE. You cannot claim it in both the sections.
   But if your housing loan interest is Rs. 2.00 Lacs then you can claim Rs. 1.5 Lacs in the old section 24 and 0.5 Lacs in the new section 80EE.
3. The date of acquisition of house is irrelevant for claiming the extra benefit of Rs. 1.00 Lacs. The only condition is for sanctioning of housing loan during the Financial Year 2013-2014. For e.g. if you have taken housing loan on 5.5.2013 and the house is acquired on 8.5.2014 then you are eligible to claim this extra benefit because the loan was sanctioned during Financial Year 2012- 2013.
   Mytax café view: In our opinion very few people can claim this extra benefit of Rs. 1.00 Lacs because it is very difficult for an individual to satisfy all the conditions mentioned above.