Section 80EEA – Deduction for interest paid on home loan for affordable housing
A recent survey by Confederation of Indian Industry (CII) and real estate firm Anarock has revealed that real estate is the most preferred option amongst the young investors, about 52% of millennials choose real estate as the best asset class, while 30% of generation X and 11% of generation Z are of the same opinion(Source – https://www.indiatimes.com/worth/investment/52-percent-millennials-prefer-real-estate-investment-600479.html). The reason for this trend being the fact that real estate is a secure investment, resilient to the investment market volatility, and yields good ROI especially when the choice of investment is in the emerging market like OMR. What makes real estate a smart choice apart from these obvious reasons is the highly beneficial tax benefits it offers.
The reason for this trend being the fact that real estate is a secure investment, resilient to the investment market volatility, and yields good ROI especially when the choice of investment is in the emerging market like OMR. What makes real estate a smart choice apart from these obvious reasons is the highly beneficial tax benefits it offers. One such tax benefit is handed out by the ‘80EEA deduction’ which provides deduction on home loan interest for first-time homebuyers. This exemption was introduced in 2019 and was extended to 31st March 2022 and can be available by all the home buyers who choose the old tax regime, earlier to Year 2023, and with the stamp value of the property not exceeding Rs. 45 lakhs. Let us know more about it here –
- Eligibility criteria: The 80EEA deduction is available only to first-time homebuyers, i.e., individuals who do not possess any residential property (be it for self-occupancy or for renting) at the time of sanctioning of their home loan.
- Maximum deduction possible: The home owner/ co-owners can avail a maximum deduction up to Rs. 1.5 lakh per financial year under Section 80EEA.
- Qualification criteria of the property: The 80EEA deduction is only applicable on home loans that are availed for the purchase of affordable housing, i.e. the stamp value of the property should not exceed Rs. 45 lakh.
- Tax exemption for joint owners: In case of joint ownership, every co-owner of the property who is also the co-borrower of the home loan can claim a deduction up to the maximum limit of Rs. 1.5 lakh yearly.
- Time limit: Home loans offered by financial institutions between 1st April 2019 and 31st March 2022 are eligible for this exemption. In 2023 when one chooses the earlier tax regime, they can avail this benefit
- Are existing deductions available?: One can continue to avail the maximum deduction of Rs. 2 lakh available under Section 24(b). So, when both the exemptions are availed, the property owner/ co-owners has to claim exemption upto Rs. 3.5 lakh every year.
Section 80 EEA hands out many advantages to the property owners, along with tax exemption of upto 1.5 lakh per year, the provision for the co-owners of the property to avail this benefit makes it highly beneficial to every co-borrower of the home loan. Since there is no constraint regarding the nature of the property (Self-occupancy or rented to tenant), it offers the property owners a lot more flexibility.
With many new-gen gated community apartments coming up in hot residential areas in the city like futuristic apartments in Siruseri and other emerging micro markets along OMR, available in a buyer friendly price that falls in the eligibility criteria for 80 EEA Exemption, investment in a property has more reasons to make the home buyer happy.
Checkout these beautiful apartments in OMR, a beautiful ambience, premium lifestyle amenities and an attractive design and layout make these flats unique in many ways, and not to forget the very beneficial 80EEA exemptions one can avail on their home loan.