Deduction in respect of Interest on Loan Taken for Acquisition of Residential House Property

1. Who is eligible to get benefit under this Section?

An Individual who has taken a Loan for acquisition of residential house property from any Financial Institution.

2. What is the benefit accruing to the Eligible Assessee under this Section?

Interest payable on such loan would qualify for deduction under this section.

3. For what Period the benefit can be enjoyed?

The benefit of deduction under this section would be available from A.Y.2020-21 and subsequent assessment years till the repayment of loan continues.

4. What is the Amount of deduction an Eligible Assessee can get under this section?

The maximum deduction allowable is ₹150000/-. The deduction of up to ₹150000/- under section 80EEA is over and above the deduction available under section 24(b) in 
respect of interest payable on loan borrowed for acquisition of a residential house property.

Note: - In respect of self-occupied House Property, interest deduction under section 24(b) is restricted to Rs. 200000/-. In case of let out or deemed to be let out property, even though there is no limit under section 24(b), section 71(3A) restricts the amount of loss from house property to be set-off against any other head of income to Rs. 200000/-Accordingly, if interest payable in respect of acquisition of eligible house property is more than Rs.  200000/- the excess can be claimed as deduction under section 80EEA, subject to fulfillment of conditions.

Conditions to be fulfilled:-

Note: 

• For claiming Interest deduction U/s.24, it is to note that the amount may be borrowed from either of the Financial Institution/from friends/from relatives.
• But to get deduction under this section, one need to borrow from Financial Institutions only.

Example:

Mr. B incurred an Interest Expense of Rs. 250000/- on the amount borrowed for acquisition of Residential House Property. What are the deductions available to him 
for the A.Y 20-21 w.r.t Interest Expense?

Mr. B can claim deduction with respect to Interest Expense as follows:

• Rs.200000/- can be claimed in Sec.24(b)
• Balance Rs.50000/- can be claimed in Sec.80EEA