Buying a home is a significant milestone, and in India, it comes with the added benefit of various tax deductions. One such benefit is under Section 80EEA deduction of the Income Tax Act, which offers tax relief to homebuyers. Understanding these benefits can greatly aid in financial planning and reduce the overall cost of buying a home.
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Section 80EEA was introduced to encourage affordable housing. It allows additional tax deduction on interest paid on home loans for a residential property. This provision is over and above the deduction available under Section 24(b) and Section 80C.
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To avail of this deduction, you must meet specific criteria:
The maximum deduction available under Section 80EEA is ₹1.5 lakh per annum. This is in addition to the ₹2 lakh deduction under Section 24(b) and ₹1.5 lakh under Section 80C for home loan repayment.
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For the purposes of Section 80EEA, a property is considered affordable if its value is at most ₹45 lakh. Additionally, there are specific carpet area requirements to qualify. In metropolitan cities, the property’s carpet area must be below 645 square feet (sqft) or 60 square metres (sqm). For properties in non-metropolitan areas, the limit is set at 968 sqft or 90 sqm.
To claim this deduction, you need to provide details of the interest paid on the home loan while filing your income tax return. Ensure you have all the necessary documents, such as the loan sanction letter and interest certificates from the bank.
Example
For example, consider Mr. Sharma, who bought a house worth ₹35 lakh and took a home loan with an annual interest of ₹3.5 lakh. He can claim ₹2 lakh under Section 24(b) and an additional ₹1.5 lakh under Section 80EEA, thereby saving a significant amount on taxes.
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While Section 80C covers principal repayment, Section 80EEA focuses solely on interest payment, providing an added advantage. Taxpayers can strategically plan their taxes by combining these deductions.
Section 80EEA is a boon for first-time homeowners. By understanding and utilizing these provisions effectively, taxpayers can significantly reduce their financial burden.
| Criteria | Section 80EE | Section 80EEA |
| Eligibility | First-time homebuyers | Homebuyers of affordable housing (Should not own any residential property on loan sanction date) |
| Loan Sanction Period | 1st April 2016 to 31st March 2017 | 1st April 2019 to 31st March 2022 |
| Deduction Limit | Up to ₹50,000 on interest paid | Up to ₹1.5 lakh on interest paid |
| Loan Amount Limit | Should not exceed ₹35 lakh | No specific limit |
| Property Value Limit | Should not exceed ₹50 lakh | Stamp duty value should not exceed ₹45 lakh |
Purchasing a home comes with several tax benefits that can significantly reduce the overall cost of borrowing. Here are the key tax benefits available on home loans for the financial year 2024-25:
Self-Occupied Property: Homeowners can claim a deduction of up to ₹2 lakh on the interest paid on a home loan for a self-occupied property.
Let-Out Property: For let-out properties, there is no upper limit on the interest deduction. However, the total loss that can be set off under the head “Income from House Property” is capped at ₹2 lakh, with the remaining loss carried forward for up to 8 years.
Limit: You can claim a deduction of up to ₹1.5 lakh under Section 80C for the principal repayment of a home loan. This also includes payments made towards stamp duty and registration fees.
3. Additional Deduction for First-Time Homebuyers (Section 80EE)
Eligibility: First-time homebuyers can claim an additional deduction of up to ₹50,000 on interest paid under Section 80EE, provided the loan amount does not exceed ₹35 lakh, and the property value does not exceed ₹50 lakh. The loan should have been sanctioned between 1st April 2016 and 31st March 2017.
Eligibility: An additional deduction of up to ₹1.5 lakh is available under Section 80EEA for interest paid on loans sanctioned between 1st April 2019 and 31st March 2022. The stamp duty value of the property should not exceed ₹45 lakh. The individual should not own any other residential property on the date of sanction of the loan.
Eligibility: Interest paid during the construction period can be claimed in five equal installments starting from the year in which the construction is completed. The total deduction for the pre-construction period and the interest for the respective year should not exceed the applicable limits under Section 24(b).
Eligibility: If a home loan is taken jointly, each co-borrower can claim a deduction for home loan interest up to ₹2 lakh each (for self-occupied property) and principal repayment up to ₹1.5 lakh each under Section 80C, provided they are also co-owners of the property.
Yes, if you and the co-applicant are co-owners of the property and both are paying the EMIs.
Yes, till the repayment of the loan, subject to the conditions of the section.
Deduction under Section 80EEA is available until the repayment of the home loan, provided the other conditions of the section are met.
No, Section 80EEA only allows for the deduction of interest on the home loan, not the principal repayment.
No, you cannot claim deduction under both Section 80EE and 80EEA simultaneously. If you are eligible for Section 80EEA, then 80EE cannot be claimed.
Yes, you can avail deductions under both Section 24(b) for interest on a home loan and Section 80EEA simultaneously.
Yes, joint owners can claim the deduction under Section 80EEA separately, provided both are contributing to the home loan repayment and are co-borrowers of the loan.
No, Section 80EEA does not provide for the deduction of principal repayment. It only allows for the deduction of interest on a home loan.
No, Section 80EEA is applicable only to taxpayers who do not own any other residential property on the date of sanction of the loan, hence it cannot be claimed for a second property.
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