Tax benefits on home loan interest in FY 2016-17

Yesterday we discussed home loan tax benefits available in financial year 2015-16(assessment year 2016-17).
Budget 2016 brought some tax related changes for home buyers applicable from financial year 2016-17, here’s a recap of your Tax Benefits in FY 2016-17 –
 

• There is no change in tax benefit for home loan interest from last year. A maximum deduction of Rs 2,00,000 can be claimed for a property which is self-occupied. Self-occupied means a property in which you live or your family lives or it is lying vacant.
• • Additional tax benefits under section 80EE – Section 80EE has been revamped. An additional deduction of Rs 50,000 on home loan interest is allowed to be claimed starting financial year 2016-17. However to be able to claim this deduction, you must meet the following conditions
  • The loan must be taken between 1^st April 2016 to 31^st March 2017
  • As on the date of sanction of the loan the taxpayer should not own any property
  • The loan must be taken from a financial institution
  • The value of the house must be less than Rs 50lakhs
  • The loan must be for less than Rs 35lakhs

  If these conditions are met you can claim an additional deduction of Rs 50,000 for home loan interest besides Rs 2lakhs mentioned in the first bullet. There is no time limit on the period for which this deduction is allowed, you can claim this for as long as you are repaying the loan.
   

  • Extension of time limit for completion of construction – Sometimes, taxpayers take home loans for under construction property. To claim Rs 2lakhs deduction on such home loan interest, the construction of the property must be completed within 3 years. (Period of 3 years is calculated from the end of the financial year in which loan is taken). This period of 3 years has been extended to 5 years starting 1^st April 2016.

  Note that interest deduction can be claimed starting the financial year in which construction of the property is complete.