MAXIMUM DEDUCTION OF RS.3.5 LAKHS FOR INTEREST PAID ON HOME LOAN – Here’s how you can claim

Section 80EEA

What is deduction U/s 80EEA?

The section provides an Interest deduction of Rs. 1,50,000/- paid on loan taken from any financial institution for the purpose of acquisition of an affordable residential property in computing the total income of the assessee over and beyond the deduction allowed u/s 24(b).

What is affordable Property as per section 80EEA?

An affordable house property is one which meets the following two criteria:-

1. Carpet area of the property:

If a unit is located in a metropolitan city, its carpet area should not exceed 645 sq ft or 60 sq metres, for the owner to claim the benefit under Section 80EEA. For units in any other city, the carpet area has been limited at 968 sq ft or 90 sq metres.

1. Value of property:

The stamp duty value of the property should be less than or equal to 45 Lakh Rupees.

S. No	Particulars	80EEA
1.	Amount of Deduction	Rs. 1,50,000/- per year
2.	Eligible Assessee	Individual
3.	Date of Sanction of Loan by any Financial Institution	1.4.2019-31.3.2022
4.	Value of Property	<45 Lakh Rupees
5.	Other Points	The taxpayer should not own any residential house property as on the date of sanction of loan.

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FREQUENTLY ASKED QUESTIONS

1. Can a Non – Resident claim deduction under section 80EEA?

Yes. As the provision is silent about the residential status of the assesse, it is interpreted that even a Non Resident is eligible to claim the deduction under section 80EEA.

• Can I claim the Interest paid on loan taken from a relative?

No. The section clearly specifies that the interest paid on loan taken from a financial institution can only be allowed as a deduction. This means that interest paid on loans taken from family members, relatives or friends cannot be allowed as a deduction.

• Can I claim deduction u/s 80EEA for purchase of plot?

Deduction under this section is applicable only with respect to purchase of residential housing units, including flats or apartments. Therefore, this section is not applicable for purchase of plot. 

• Can I claim interest under Sections 24(b) and Section 80EEA simultaneously?

For an assessee owning a self- occupied property, the maximum deduction available under section 24(b) is Rs.2,00,000/-. In addition to section 24(b) the assesse can also avail an deduction of Rs.1,50,000/- under section 80EEA. Thus the maximum deduction available to an assessee in respect of Interest paid on housing loan is Rs. 3,50,000/- subject to all the other conditions prescribed under section 24(b) and 80EEA.

• Can Joint owners claim u/s 80EEA separately?

If the joint owners are also co-borrowers of the housing loan and meet all the conditions specified in the provisions they can claim interest deduction Rs. 1,50,000/- each.

• Can I claim interest paid on construction or repairs of the house property?

Interest paid on purchase of Residential property can only be claimed. Therefore the interest paid on loan borrowed for construction or repairs of the house property cannot be claimed u/s 80EEA.