Section 80EEA: Deduction for Interest on Affordable Housing Loan

Applicable to: First-time homebuyers of affordable housing

This section provides an enhanced tax benefit for interest paid on home loans, specifically targeting purchases of budget-friendly properties.

Key Features (AY 2025-26)

1.   Eligibility Criteria

• Property must be “affordable” as per government definition:
  • Stamp duty value ≤ ₹45 lakh
  • Loan sanctioned between 1 April 2019 to 31 March 2022
• First-time homebuyer(should not own any other residential property at loan sanction date)
• Loan must be from financial institutions (banks/NBFCs)

2.  Deduction Amount

• ₹1.5 lakh per year(over and above Section 24’s ₹2 lakh limit)
• Total possible interest deduction:₹3.5 lakh (₹2L under Sec 24 + ₹1.5L under 80EEA)

3.  Tenure of Deduction

• Available for loan interest paid during the entire repayment period

4.  Required Documents

✅ Loan sanction letter

✅ Property registration documents

✅ Certificate from lender confirming eligibility

Comparison With Similar Sections

Practical Example

Case: First-time buyer purchases home worth ₹42 lakh in 2020

• Annual home loan interest: ₹3 lakh
  Tax benefit:
• ₹2 lakh (Section 24) + ₹1.5 lakh (Section 80EEA) = ₹3.5 lakh deduction
  (Note: Only ₹3 lakh can be claimed as that’s the actual interest paid)

Pro Tips for Maximizing Benefits

1. Combine with Section 80C(principal repayment) for additional ₹1.5 lakh deduction
2. Verify stamp duty valuematches purchase price (crucial for eligibility)
3. Keep all loan documentsfor at least 8 years (tax audit period)

FAQs

Q: Can I claim both 80EE and 80EEA?
A: No, they apply to different loan sanction periods.

Q: Is this available for under-construction property?
A: Yes, if completion certificate is received within 5 years of loan sanction.

Q: Can NRI claim this deduction?
A: No, only resident Indian taxpayers.