Are you thinking of buying an affordable home? There is no time like the present with the latest home loan benefits announced in the budget 2019.
As per the budget 2019, you can avail an additional deduction of 1.5 lakhs per year, for home loan interest, under new section 80EEA if you are buying an affordable property. This is over and above the existing deduction of 2.0 lakhs per year.
Laid out below are the salient features of this benefit**:
Type of Property:
This benefit is applicable to Home Loan for affordable home purchase.
- Provided you do not own any other residential property on the date of sanction of loan for the purchase. Which means:
- You will be eligible if the property purchase is your first residential purchase.
- You will also be eligible if you have sold or are selling your existing residential property and buying another one, as long as you don’t own any residential property as on the date of sanction of loan.
- Furthermore, if you own commercial property it will not impact eligibility for this deduction.
Value of Property:
The benefit will be applicable if the stamp duty value of the residential property does not exceed forty-five lakhs.
Please note that:
- The limit is on the stamp duty value and NOT on the total cost of the property. Here “stamp duty value” means the value assessed by any authority of the Central Government or a State Government for the purpose of payment of stamp duty.
- For most apartment projects the stamp duty value is generally in the range of 70% to 80% of the total cost of the property. Therefore, you may still be eligible even if the total cost of your property is in the range of 55 lakhs to 65 lakhs, if the stamp duty value is within 45 lakhs.
Home Loan Sanction Date:
The benefit is applicable if the home loan is sanctioned between 1st April 2019 and 31st March 2020.
There is no restriction on:
- The date of booking of property, which could have been before 1st April 2019.
- The date of loan disbursement, which can be after 31st March 2020 also.
Duration of the Home Loan Benefit:
The deduction can be claimed from the financial year 2019-2020 (the assessment year 2020-2021) onwards. And there is no restriction on the number of years for which this deduction can be availed. This means that the tenure of the home loan will not impact your eligibility for this benefit.
This benefit will make home buying more affordable and if you are on the journey of home buying you must assess its applicability to you.
If you have any further questions reach out to us using the comments section below.
** – Based on the Finance Bill (No.2) 2019 as presented in the Parliament and is subject to changes, if any, before enactment.