Introduction

Buying a house is a big goal for many people. To make this more affordable, the government gives tax benefits on home loans. One such benefit is available under Section 80EEA of the Income Tax Act. This section allows an extra deduction on the interest paid for home loans. It mainly supports first-time homebuyers who are purchasing affordable houses. Understanding Section 80EEA can help reduce your taxable income and save money every financial year. Let us understand its meaning, eligibility, rules, and how to claim it simply and easily.

What is Section 80EEA?

Section 80EEA allows individuals to claim an additional deduction of up to ₹1,50,000 per financial year on the interest paid on a home loan. This deduction is available over and above the deduction available under Section 24(b).
The main objective of this section is to promote affordable housing among first-time home buyers. It applies only to home loans taken from a financial institution such as a bank or housing finance company.

The benefit under Section 80EEA can be claimed only if:

• The stamp duty value of the property does not exceed a specified limit (affordable housing category).
• The taxpayer does not own any other residential property at the time of taking the loan.

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Eligibility Criteria to Claim Deduction under Section 80EEA

One can claim a deduction under Section 80EEA only when the following conditions are met:

• This deduction can only be claimed by an individual taxpayer (a single person). Companies, firms, or a Hindu Undivided Family (HUF) cannot claim it
• You must be a first-time homebuyer. This means that on the day your bank officially sanctions your home loan, you should not own any other residential house property in your name.
• Your home loan must have been sanctioned (approved) by the bank or housing finance company during a specific time period: April 1, 2019, to March 31, 2022. If your loan was approved even one day before April 1, 2019, or after March 31, 2022, you cannot use this section.
• The total value of the house, according to the government's official records (Stamp Duty Value), must not be more than ₹45 Lakh. This ensures the benefit goes only to affordable housing.
• You should not be eligible to claim any deduction under the older tax benefit rule, Section 80EE, for the same property.

Tax Benefits on Home Loan (FY 2025-26)

• 1. Section 80C (Principal Repayment):

  • Benefit: Deduction from the principal amount of the loan repaid during the year.
  • Maximum Limit: ₹1,50,000 per year.
  • Note: This is a combined limit that also includes other popular tax-saving instruments like PPF and LIC premiums.

• 2. Section 24 (Interest Repayment):

  • Benefit: Deduction on the interest paid on the home loan.
  • Maximum Limit (Self-Occupied House): ₹2,00,000 per year.

• 3. Section 80EEA (Additional Interest Deduction):

  • Benefit: An extra deduction on the interest component, available primarily to first-time homebuyers of affordable housing.
  • Maximum Limit: ₹1,50,000 per year.
  • Key Advantage: This is an additional benefit over and above the ₹2,00,000 limit of Section 24.

Tax Benefits on Second Home Loan

Section 80EEA applies only when the buyer does not own any other residential property at the time of loan sanction. So, it does not apply to second homes. However, Section 24(b) may still provide benefits if conditions are met.

• If the Second House is Rented Out (Let Out):

  • You can claim the entire interest paid on the loan as a deduction.
  • However, the maximum loss you can set off against other income (like salary) in a financial year is capped at ₹2,00,000.

• If the Second House is Treated as Self-Occupied:

  • You can combine the interest paid on both your first and second home loans.
  • The total combined deduction for interest under Section 24 remains capped at ₹2,00,000 per year.

Additionally, the deduction for the principal repayment under Section 80C (up to ₹1,50,000) is also available for a second home loan, subject to the overall limit.

Tax Benefits on Joint Home Loan

When two or more people (like a husband and wife, or siblings) take a home loan together, it is called a Joint Home Loan. This is a big advantage for claiming tax benefits, especially under Section 80EEA, provided both borrowers are also co-owners of the property.

In a joint loan, each co-borrower can claim the deduction on the interest they have paid, subject to meeting all the eligibility conditions individually.

This means:

• Doubled Benefit: If a husband and wife both took a joint loan and are co-owners of an affordable house (value up to ₹45 lakh), each of them can claim an interest deduction.
• Section 24 Benefit: Each person can claim up to ₹2,00,000 under Section 24 (if the house is self-occupied).
• Section 80EEA Benefit: Additionally, each person can claim up to ₹1,50,000 under Section 80EEA.
• Total Deduction: The family's total deduction on interest could be up to ₹7,00,000 (₹3,50,000 for one person + ₹3,50,000 for the other person), making homeownership much more affordable. To claim this, the interest certificate from the bank must clearly state how much interest each co-borrower has paid

Conditions to Fulfill for Claiming the Deduction under Section 80EEA

1. Loan Approval Window: The home loan must have been sanctioned (approved) by a bank or a registered housing finance company only between April 1, 2019, and March 31, 2022.
2. Affordable House Price: The official value of the house, called the Stamp Duty Value, should not go above ₹45,00,000 (₹45 Lakhs).
3. First-Time Owner Status: On the day your loan was sanctioned, you must not have owned any other residential property in your name. If you sold your previous house before this date, you are considered a first-time buyer.
4. Cannot Claim 80EE: You must ensure you are not claiming any deduction under a similar but older rule, Section 80EE. You can claim under one or the other, but not both.
5. Only for Residential Property: The loan must be taken for the purchase or construction of a residential house (a house you live in). Loans for commercial property, repairs, or renovations do not qualify.
6. Old Tax Regime: You must choose to file your tax return under the Old Tax Regime, as this specific deduction is not allowed under the New Tax Regime.

How is the Deduction Calculated Under Section 80EEA?

1. The actual amount of interest you paid on the home loan during the Financial Year.
2. The maximum limit is ₹1,50,000.

The Formula:

Deduction under Section 80EEA = Lower of (Actual Interest Paid OR ₹1,50,000)

Example:

Let's say in FY 2025-26, you paid a total interest of ₹3,20,000 on your home loan, and you meet all the Section 80EEA conditions.

1. First, you use the general deduction rule (Section 24): You claim a maximum of ₹2,00,000 from the total interest paid.

   • Interest Remaining: ₹3,20,000 - ₹2,00,000 = ₹1,20,000

2. Next, you use the extra benefit (Section 80EEA) on the remaining interest:

   • Amount to Compare: Lower of (Remaining Interest: ₹1,20,000 OR Maximum Limit: ₹1,50,000).
   • Deduction under 80EEA: ₹1,20,000

3. Your Total Interest Deduction: ₹2,00,000 (Sec 24) + ₹1,20,000 (Sec 80EEA) = ₹3,20,000. In this case, you claimed the entire interest paid!

This shows how Section 80EEA helps you claim any interest amount that goes beyond the basic ₹2,00,000 limit.

Points to be Considered to Claim Section 80EEA

• Get Your Interest Certificate: The most important document you need is the Interest Certificate from your bank or housing finance company. You must get this certificate before filing your tax return.
• No Double Claiming: The interest amount you claim under Section 80EEA cannot be claimed again under any other section, like Section 24. The law makes sure you claim each part of the interest only once.
• Completion of Construction: The deduction under Section 80EEA (and Section 24) can only be claimed after the construction of the house is completed and you have received possession. You cannot claim the deduction while the house is still being built.
• Old Regime is a Must: Always remember that if you want to use Section 80EEA, you must choose the Old Tax Regime when you file your Income Tax Return.
• Keep Documents Safe: Since this benefit can be claimed for many years until the loan is over, keep your loan sanction letter and annual interest certificates safe for future reference.

What is the Difference Between Section 80EEA & Section 24?

Feature

Section 24(b) - Interest Deduction

Section 80EEA - Additional Interest Deduction

Who Can Claim?

All Individual Homeowners (First-time or Second-time).

Only First-Time Homeowners.

Deduction Limit

Up to ₹2,00,000 per year (for a self-occupied house).

Additional deduction up to ₹1,50,000 per year.

Property Value Limit

No limit on the value of the property.

Property Stamp Duty Value must be ₹45 Lakh or less.

Loan Sanction Date

Applicable for loans taken anytime.

Loan must be sanctioned between April 1, 2019, and March 31, 2022.

Nature of Deduction

This is the primary/main deduction on interest.

This is an extra/additional deduction, claimed after Section 24.

Key Difference Between Section 80EEA & Section 80EE?

Feature

Section 80EE (Older Rule)

Section 80EEA (Newer Rule)

Deduction Limit

Additional deduction up to ₹50,000 per year.

Additional deduction up to ₹1,50,000 per year.

Loan Sanction Date

Loan must be sanctioned between April 1, 2016, and March 31, 2017.

Loan must be sanctioned between April 1, 2019, and March 31, 2022.

Property Value Limit

Property value must be ₹50 Lakh or less.

Property Stamp Duty Value must be ₹45 Lakh or less.

Loan Amount Limit

Loan amount must be ₹35 Lakh or less.

No maximum limit on the loan amount is specified.

Cannot Claim

Cannot claim deduction under Section 80EEA.

Cannot claim deduction under Section 80EE.

Conclusion

Section 80EEA is a helpful tax benefit for first-time homebuyers who are purchasing affordable houses. It allows additional savings on the interest paid on home loans, reducing the overall tax burden. When combined with Section 24(b) and Section 80C, it helps families manage home loan EMI better and encourages home ownership. Understanding the eligibility and conditions ensures that taxpayers can make full use of this benefit.