Everything You Need to Know About Tax Benefit on Affordable Housing Under Section 80EEA
The growing middle-class, coupled with the need for rapid urbanisation, brought the idea of affordable housing to light. The objective of affordable housing is to provide houses for people in a society with limited income by extending various support. And if you are that first-time homebuyer seeking a home loan to purchase your house, spend a couple of minutes to know the ongoing scenario.
Benefits of a Home Loan Calculator
The repayment of the home loan is a significant liability that involves EMI payment for a specific tenure. So before signing off the loan agreement, you can visit the financial institution's website to use the home loan calculator.
. A home loan calculator gives accurate results if you enter the loan amount, tenure, and prevailing home loan interest rate. Alternatively, you can also adjust the figures, depending upon the type of calculator available on your lender's website. Once you have entered the three values, the home loan calculator will automatically display the exact EMI in seconds. The home loan calculator also compares the loan offers from different banks with different home loan interest rates and narrows down the best option.
All-Time Low Home Loan Interest Rate
To meet the objective of affordable housing, home buying is made more lucrative for you. With RBI slashing the REPO rate, lenders have come forward to reduce home loan interest rates. You can now reap the benefits of low home loan interest rates and get tax benefits simultaneously.
If you wish to purchase a house under the affordable housing category, then you can avail of an additional deduction on the interest paid on the home loan. Besides Section 24 of the Income-tax Act, you will also be eligible for deduction under Section 80EEA for a maximum of Rs 1.5 lakh in a financial year. Deduction under this section is available over and above the deduction under Section 24 for a maximum of Rs 2 lakh. Thus, you can get a maximum claim deduction of up to Rs 3.5 lakh in a financial year to buy an affordable house.
Points to Remember
To claim deductions under Section 80EEA, you have to satisfy few conditions:-
a) You have to take a home loan from a financial organisation like a housing finance company for purchasing the residential property.
b)The stamp duty value of the house property shouldn't exceed Rs 45 lakh.
c)You shouldn't own any residential property as of the date of sanction of the loan; and
d)You must be an individual homebuyer/taxpayer to claim deduction under the prevailing section 80EEA (companies, HUFs, etc. are not included)
It is essential to know that the same amount can't be claimed twice under two different sections. For instance, if interest paid by you is Rs 1.2 lakh in a fiscal year on your home loan, then you can claim deduction either under Section 24 or Section 80EEA.
Conclusion
As a first-time homebuyer, you are now aware of the income tax benefits under Section 80 EEA for affordable housing. This is the perfect time to avail the maximum benefit of an all-time low home loan interest rate. Log on to the lender's website to calculate the accurate EMI using the home loan calculator. Congratulations! You are an informed decision-maker now.
