Buying your own house is a big dream for most people. To make this dream easier, the government offers different tax benefits on home loans. You may already know about Section 24(b), which gives a deduction on home loan interest up to ₹2 lakh per year.
But many people do not know that there is another section in the Income Tax Act that gives you extra deduction on home loan interest. It is called Section 80EEA.
This section was introduced to help first-time homebuyers. It gives you a deduction of up to ₹1.5 lakh per year on the interest you pay for your home loan, over and above the ₹2 lakh limit of Section 24(b).
1. What is Section 80EEA?
Section 80EEA is a tax benefit given to people who buy their first house. If you take a home loan and meet certain conditions, you can claim an extra deduction of up to ₹1.5 lakh per year on the interest you pay.
This deduction is in addition to the ₹2 lakh limit you can claim under Section 24(b).
For example:
If you are paying ₹3.2 lakh as home loan interest in a year:
- ₹2 lakh can be claimed under Section 24(b).
- Remaining ₹1.2 lakh can be claimed under Section 80EEA.
If your interest is more than ₹3.5 lakh in a year, you can still claim only ₹1.5 lakh under 80EEA.
2. Why was Section 80EEA introduced?
The government wants more people to own houses, especially those from the middle-income group. In Budget 2019, Section 80EEA was introduced to encourage people to buy affordable houses by giving them extra tax savings.
It is mainly for first-time homebuyers who take a loan for a property with a certain value.
3. Who can claim 80EEA deduction?
To claim this benefit, you must meet the following conditions:
- You must be an individual – This means the deduction is not available to companies, firms, or HUFs.
- You must be a first-time homebuyer – You should not own any residential property on the date the loan is sanctioned.
- Loan must be from a financial institution – This means a bank or a housing finance company.
- Loan must be sanctioned between 1 April 2019 and 31 March 2022 – As per current law, no new claims are allowed for loans after 31 March 2022.
- Stamp duty value of the house should not be more than ₹45 lakh – This ensures the benefit is for affordable housing.
- You should not claim deduction under Section 80EE for the same house – You can claim either 80EE or 80EEA, but not both.
4. How much deduction can you get?
You can claim up to ₹1,50,000 per year under Section 80EEA for the interest you pay on your home loan.
This is in addition to the ₹2 lakh deduction under Section 24(b).
So, the total deduction for home loan interest can be as high as:
- ₹2,00,000 (Section 24b) + ₹1,50,000 (Section 80EEA) = ₹3,50,000 per year
5. Example calculation
Let’s understand with a simple example:
Case 1: Interest is less than ₹3.5 lakh
- Annual interest paid: ₹3,00,000
- Claim under Section 24(b): ₹2,00,000
- Remaining interest: ₹1,00,000 (claimed under Section 80EEA)
- Total deduction: ₹3,00,000
Case 2: Interest is more than ₹3.5 lakh
- Annual interest paid: ₹4,00,000
- Claim under Section 24(b): ₹2,00,000
- Claim under Section 80EEA: ₹1,50,000 (maximum allowed)
- Total deduction: ₹3,50,000
If you are in the 30% tax bracket, claiming ₹3,50,000 can save you around ₹1,05,000 in tax (plus cess).
6. Key points to remember
- The deduction is available only for affordable houses with stamp duty value up to ₹45 lakh.
- You must not own any other house when the loan is sanctioned.
- Only individual taxpayers can claim this benefit.
- Loan must be from a bank or housing finance company, not from relatives or friends.
- This section is available only for loans sanctioned between 1 April 2019 and 31 March 2022.
7. Difference between 80EEA and 24(b)
| Feature | Section 24(b) | Section 80EEA |
|---|---|---|
| Type of deduction | Interest on housing loan | Extra interest deduction for first-time buyers |
| Maximum limit | ₹2,00,000 | ₹1,50,000 |
| Over and above 80C? | Yes | Yes |
| Property value limit | No limit | Up to ₹45 lakh (stamp duty value) |
| First-time buyer requirement | No | Yes |
| Loan sanction period | Any time | Between 1 April 2019 and 31 March 2022 |
8. How to claim the deduction
- Check eligibility – Make sure you meet all conditions.
- Get interest certificate from your bank or housing finance company.
- Claim in your Income Tax Return (ITR) – Mention the amount in the section for deductions.
- Keep documents ready – Loan sanction letter, property documents, stamp duty value proof, interest statement.
9. Benefits of Section 80EEA
- Extra tax saving of up to ₹1.5 lakh per year.
- Encourages people to buy their first home.
- Helps middle-income earners afford a house.
- Supports the government’s housing-for-all mission.
Frequently Asked Questions
Q1: Can I claim 80EEA for a second house?
No. It is only for your first residential property.
Q2: Can joint owners claim 80EEA?
Yes, if both meet the eligibility and are paying the loan. Each can claim up to ₹1.5 lakh.
Q3: Can I claim both 80EE and 80EEA?
No. You can claim only one.
Q4: Is the principal repayment covered under 80EEA?
No. 80EEA is only for interest. The principal part can be claimed under Section 80C (within ₹1.5 lakh limit).
Q5: What happens if I sell the house?
The tax benefit stops once the loan is closed or the property is sold.
Conclusion
Section 80EEA is a great way for first-time homebuyers to save more tax on their housing loan. If you bought your first affordable house with a loan sanctioned between April 2019 and March 2022, you may be eligible for an extra deduction of up to ₹1.5 lakh every year on interest payments.
This can reduce your tax bill and make owning your home easier on your budget. Always keep your loan documents and interest certificate safe, and claim the benefit while filing your tax return.
