Summary

Buying your first home is a major financial step, and with the right knowledge, it can also come with major tax benefits. Section 80EEA of the Income Tax Act is a powerful but lesser-known exemption that allows you to save significantly on your home loan interest. If you’re planning to buy a house under the affordable housing scheme, this could be the boost your budget needs.

In this blog, we’ll break down the eligibility, benefits, and how you can make the most of the 80EEA exemption.

Key Takeaways

• Section 80EEA offers an additional ₹1.5 lakh deduction on home loan interest
• It is available to first-time homebuyers only
• The property value must be ₹45 lakh or less
• The benefit is in addition to Section 24(b) and not available if Section 80EE is claimed
• Loan must be sanctioned within specific dates to qualify

Table of Contents

• What Is Section 80EEA?
• Who Is Eligible to Claim 80EEA?
• 80EE vs 80EEA: What's the Difference?
• How Much Can You Save?
• What Kind of Properties Qualify?
• Can Co-Owners Claim 80EEA Separately?
• How to Claim the 80EEA Exemption
• Documents You’ll Need
• Common Mistakes to Avoid
• FAQs

What Is Section 80EEA?

Section 80EEA was introduced by the Government of India in the 2019 Union Budget to support the ‘Housing for All’ initiative. It provides an additional deduction of up to ₹1.5 lakh on interest paid on a home loan, specifically targeted toward buyers purchasing an affordable home for the first time.

This deduction is over and above the ₹2 lakh available under Section 24(b), making it especially beneficial for middle-income homebuyers.

Who Is Eligible to Claim 80EEA?

You can claim the exemption under Section 80EEA if you meet the following conditions:

• You are a first-time homebuyer
• The loan was sanctioned between April 1, 2019 and March 31, 2022
• The stamp duty value of the property does not exceed ₹45 lakh
• You are not claiming tax benefit under Section 80EE
• You do not own any other residential house at the time the loan is sanctioned

If all these boxes are ticked, you’re eligible to claim an additional ₹1.5 lakh per year in deductions under 80EEA.

80EE vs 80EEA: What's the Difference?

It’s common to confuse the two, but there are key differences between Section 80EE and Section 80EEA:

If you meet the conditions for both, you must choose one. Most people prefer 80EEA due to the higher deduction limit.

How Much Can You Save?

Here’s a quick example to understand the potential savings:
Suppose you’re a salaried individual who has taken a home loan and pays ₹3.8 lakh in interest annually. You can claim:

• ₹2 lakh under Section 24(b)
• ₹1.5 lakh under Section 80EEA (if eligible)

Total deduction: ₹3.5 lakh
If you fall in the 20% tax slab, this translates into a savings of ₹70,000 annually.
Over a loan tenure of 20 years, this can make a significant dent in your total financial outgo.

What Kind of Properties Qualify?

Section 80EEA is designed to promote affordable housing, which means:

• The property should be a residential house
• It should not be a commercial property or a second home
• The stamp duty value should not exceed ₹45 lakh
• There is no restriction on the location—urban or semi-urban zones are all eligible

This makes it ideal for salaried professionals buying their first home in smaller cities or outskirts of metros.

Can Co-Owners Claim 80EEA Separately?

Yes, but with conditions.

• Both co-owners must be co-borrowers on the home loan
• Both must individually meet all the eligibility conditions
• Neither should own any other residential property
• Both must be paying a portion of the EMI

If these conditions are met, each co-owner can claim up to ₹1.5 lakh under 80EEA, allowing for a combined deduction of ₹3 lakh.

How to Claim the 80EEA Exemption

Here’s a simple process to claim the deduction when filing your Income Tax Return (ITR):

• Get your interest certificate from your lender
• Ensure the loan sanction date is within the eligible window
• Check that your property’s stamp duty value is within ₹45 lakh
• File your ITR using the correct form (usually ITR-1 or ITR-2 for salaried individuals)
• Declare the deduction under “Deductions under Chapter VI-A” in the appropriate section

There’s no need to submit documents when filing online, but it’s wise to keep all proofs in case of future verification.

Documents You’ll Need

• Sanction letter with date of approval
• Interest certificate from the lender
• Sale deed or agreement showing property value
• Declaration that you do not own any other house
• Loan repayment schedule
• PAN and Aadhaar copies (for authentication)

Organizing these documents before tax season will make the filing process much smoother.

Common Mistakes to Avoid

• Claiming both 80EE and 80EEA in the same year (you can’t do this)
• Forgetting to check the loan sanction date window
• Overlooking the stamp duty value limit
• Assuming under-construction property qualifies (possession required)
• Not maintaining documentary proof

These small errors can lead to rejection of your claim or a notice from the IT department.

FAQs