How to claim home loan deduction in your ITR? – All about Section 80EEA of Income Tax

The finance act 2019 has come with some great news for the people who are looking to buy a property. The government led by Shri Narendra Modi has laid down a plan for 2022, i.e. 75 years of independence to promote low cost housing for everyone in India.

Hence, in order to make housing attractive and less costly, a new section 80EEA has been inserted to provide additional deduction of Rs.1.5lakh on interest paid subject to certain conditions.

Let us understand the section 80EEA in detail.
 

General Meaning of Section 80EEA

Section 80EEA means that a deduction shall be extended to the assessee while computing the total income of the assessee (individual) on interest payable by him on loan taken for the purpose of acquiring any residential house property.

However, to avail this deduction under section 80EEA, the assessee must fulfill the following conditions;
 

1. Assessee must be individual

The deduction of section 80EEA is available only to individual not availing deduction under section 80EE. HUF is not covered here.
 

2. Loan must be from financial institution

To avail the deduction under section 80EEA, the loan must be taken from financial institution and not from any person i.e. individual money lenders.

3. The period ending 31^st March 2020

The deduction of section 80EEA is available only if the loan has been sanctioned during the period 1^st April, 2019 to 31^st March, 2020.
 

4. Does not own any house property

This is one of the most important conditions of section 80EEA. To claim the benefit of this deduction, the assessee must not own any house property. If you already own one property, then the deduction shall not be available to you. Hence, if you want to buy a property, buy it in your spouse name’s but make sure she doesn’t own any residential house property.

Further, if you own any commercial property like shop, then this deduction shall be available to you because the condition only says about the residential house property.
 

5. Residential house property

The deduction under section 80EEA shall be available only for residential house property and not for any commercial property. So, if you are looking to buy a property, make sure you buy a residential house property to be eligible for deduction under this section i.e. 80EEA.
 

6. Value of house property shall not exceed forty five (45) lakh

The stamp duty value of the property (circle rate) must not exceed Rs.45 lakh for the purpose of this section. Hence, if the value of property is Rs.49 lakh, then the deduction under this section will not be available.

Also, be focused that it talks about the value of property and not the amount of loan.
 

Amount of deduction under Section 80EEA

The total amount of deduction available shall be Rs.1.50 lakh and this amount is over and above the limit of Rs.2 lakh which is available under section 24B.  
 

Separate deduction for each person

Section 80EEA is applicable to each person and not property. Hence, if you have taken a joint home loan, then the deduction shall be available to each person separately.
 

Conclusion

If you need any help or advice for claiming deduction under section 80EEA or in filing your income tax return, then do contact us today.

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