Section 80EEA: Deductions For Affordable Housing

In order to accomplish the goal of “Housing for All,” the government has formally extended the interest deduction allowed for low-cost housing loans secured between April 1, 2019, and March 31, 2022.

As a result, beginning in AY 2020-21, a new Section 80EEA has been added to allow for an interest deduction (FY 2019-20). The old Section 80EE provision permitted first-time homebuyers to deduct up to Rs 50,000 in interest paid on loans approved by a financial institution between April 1, 2016, and March 31, 2017. 

The government has extended the benefit for FY 2019-20 in order to increase the benefit and boost the real estate sector. You can claim this deduction until you’ve paid off your mortgage.

Section 80EEA Characteristics

Section 80EEA: Deductions For Affordable Housing

Criteria For Eligibility

Individuals are the only ones who can benefit from this tax break. No other taxpayer is eligible for this deduction. As a result, if you are a HUF, AOP, partnership firm, company, or any other type of taxpayer, you cannot claim any benefit under this clause.

The Amount Deducted

Section 80EEA allows you to deduct up to Rs 1,50,000 in interest payments. This deduction is in addition to the Rs 2 lakh interest payment deduction allowed under Section 24(b) of the Income Tax Act.

Other circumstances 

Similar to Section 80EE, you must not own any other house property on the date of the loan’s sanction in order to claim a deduction under Section 80EEA.

The conditions for claiming the deduction are as follows:

  • For the purchase of a residential property, a housing loan must be obtained from a financial institution or a home finance organization.
  • The loan must be approved between the 1st of April 2019 and the 31st of March 2022.
  • The house property’s stamp duty value should be less than Rs 45 lakhs.
  • Individual taxpayers should not be able to take advantage of the existing Section 80EE deduction.
  • A first-time home buyer should be the taxpayer. The taxpayer must not own any residential property at the time the loan is approved.

Conditions pertaining to the carpeted section of the residence. These conditions are listed in the finance bill’s memorandum, however, they are not addressed in section 80EEA:

  • In the metropolitan areas of Bengaluru, Chennai, Delhi National Capital Region (restricted to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata, and Mumbai, the carpet area of the dwelling property shall not exceed 60 square meters (645 square feet) (the whole of Mumbai Metropolitan Region)
  • In any other city or municipality, the carpet area should not exceed 90 square meters (968 square feet).
  • This term will also apply to affordable real estate projects that are approved on or after September 1, 2019.

Section 80EEA was enacted to expand the advantages available for low-cost housing under Section 80EE. For the fiscal years 2013-14, 2014-15, and 2016-17, Section 80EE was changed from time to time to allow a deduction for interest paid on a home loan. If you want to claim this benefit, you must be a Resident, according to the clause.

As a result, both resident and non-resident Indians are eligible to claim this deduction. The provision also makes no mention of whether the residence must be self-occupied in order to qualify for the deduction. Borrowers who live in rental homes can also take advantage of this benefit.

Furthermore, the deduction is only available to individuals who purchase a home together or separately. If a person owns a home with a spouse and both of them are paying the loan payments, both of them can claim this deduction. They must, however, meet all of the requirements.

Section 80EEA and Section 24 

If the owner or his family resides within the house property, homeowners can claim a deduction for interest payments on their loan up to Rs 2 lakh under Section 24. whether or not the home is uninhabited, the deduction of up to Rs 2 lakh is obtainable. the whole loan interest is deducted if the property has been rented out. 

You can claim advantages under both Section 24 and Section 80EEA of the taxation Act if you meet the wants of both sections. 

First, expend your Rs 2 lakh deductible limit under Section 24. Then, under Section 80EEA, claim the extra benefits. As a result, this deduction is added to the Section 24 limit of Rs 2 lakh.