Tax benefit on buying an affordable house - deduction under Section 80EEA

If you have always wanted to buy your own house, now might just be the right time. The Government of India, in Budget 2019, introduced a new provision in the Income Tax Act, 1961 – Section 80EEA. This provision was introduced to help the Government achieve its “Housing for All” objective by encouraging taxpayers to acquire a house property.

  Using this provision, you can claim a deduction on the interest you pay on your housing loan. The loan should have been availed to either buy or construct affordable houses. Once you have claimed the deduction under 80EEA, you cannot subsequently claim any other tax benefits with respect to interest on housing loans under any other provision of the Income Tax Act. This ultimately means that the tax benefits under Section 80EE and Section 24(b) cannot be claimed in conjunction with Section 80EEA.

Read on to find out more about how you can avail the tax benefits offered by Section 80EEA.

Deduction under Section 80EEA
According to the provisions of Section 80EEA, you can claim up to ₹1,50,000 in a financial year as a deduction on the interest on housing loan. However, there are certain points that you need to know before claiming the deduction under this section.

  1. This deduction is only available to individual taxpayers and not to HUFs, partnership firms, or corporates.
2. The interest deduction is only available from the financial year 2019–20 onward. It cannot be claimed retrospectively for any previous financial years.
3. Additionally, if you want to claim this deduction, you should not own any other house property.
4. The housing loan should be availed only from a financial institution or a housing finance company.
5. For claiming deductions under section 80EEA for the financial year 2019-20, the loan needs to have been sanctioned any time between the 1st of April 2019 and 31st of March 2020.
6. The loan should have been utilized for buying a residential property only. Interest paid on loans availed for purchasing commercial properties does not qualify for deduction under section 80EEA.
7. The value of stamp duty of the house property should not exceed ₹45 lakhs.

  If you intend to claim tax benefits under Section 80EEA, you need to satisfy all of the conditions cumulatively. Furthermore, if you own a house property jointly with your spouse, and both of you pay the instalments of the loan, then the deduction can be claimed by both. Also, the deduction under Section 80EEA is available to both resident and non-resident individuals.

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