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Claiming 80EEA: A Guide For Home Loan Transfers

Neha Gupta

Author

Updated: 27-09-2024 at 12:35 PM

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Taxpayers can now claim a deduction of up to Rs. 1.5 lakhs under Section 80EEA of the Income Tax Act. This provision was introduced to promote affordable housing for all. It is applicable for loans taken between April 1, 2019, and March 31, 2022, and with the value of the house not exceeding Rs. 45 lakhs.

What Is Section 80EEA Of The Income Tax Act?

Section 80EEA of the Income Tax Act allows people to claim a deduction for the interest that has to be paid on the housing loan. The loan taken must be for a residential house only.

The government’s objective of “Housing for All” is to promote affordable housing, Section 80EEA allows a deduction of interest for the loans taken between the period of April 1, 2019, and March 31, 2022.

Section 80EEA allows loan takers to claim a deduction up to Rs. 1.5 lakhs per financial year until the loan is completely repaid.

Read more: The Demolishing Of Benami Act!

What Is The Eligibility Criteria To Claim The Section 80EEA Deduction?

Loan takers must ensure that they comply with the following eligibility criteria to claim the deduction.

  • Loans must be taken from a financial institution or a housing finance company.

  • It must be taken for the construction or purchasing of a residential property.

  • The residential property must be valued under Rs. 45 lakhs.

  • Loan taken between the period of April 1, 2019, and March 31, 2022.

  • Must not have claimed any other deduction in that financial year.

  • Must not own any other residential property at the same time.

A taxpayer can continue to claim their Section 80EEA deduction if they transfer their home loan to a different bank for better interest rates. They can do this given that the original conditions of the home loan are met and the loan is for the same property.

Taxpayers should ensure they have all necessary documents from both the original and new banks. These documents should have all the details of the home loan transfer and the interest payments made.

How Is The Deduction Calculated?

Let’s understand how the deduction amount is calculated with the help of an example.

Mr X took out a home loan in the financial year 2020-21 for a house with a stamp duty value of Rs 40 lakh. He paid Rs 4,00,000 in interest for the year. He did not own any other residential property on the date the loan was issued. Will Mr X be eligible to apply for Section 80EEA?

Mr X is eligible for a Rs 1,50,000 deduction under Section 80EEA. As a result, Mr X is eligible for a total deduction of Rs 3,50,000 under Sections 80EEA and 24.

Conclusion

By ensuring that the taxpayer meets the existing conditions of the home loan, the bank will not disqualify the taxpayer from claiming the Section 80EEA deduction. With proper documentation and reasoning, they can continue to claim their deduction. However, taxpayers are advised to consult a professional first as there is no explicit provision.

For any queries related to the Section 80EEA, call the general helpline number of the Income Tax Department at 1800 103 0025.

Frequently Asked Questions

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