Tax Benefits with Personal Loan
If you are a business owner and Apply for a Personal Loan under the name of your business, you can claim the interest paid towards this loan as an expense. This amount can be deducted from your business profits so that you can enjoy the much-needed exemption for the same.
If you’re using the Personal Loan to buy assets including shares, debentures or machinery, you can write it off as the cost of acquisition, and revel in the tax benefits pertaining the same.
Renovation of your House
As was the case with the purchase of a house, even the renovation of a home attracts similar tax benefits, although these are confined to repairs and improvements, including –
1. Adding a new balcony
2. Building an additional room
3. Creating a new floor to the house
4. Extending the existing rooms
5. Painting of the interior or exterior of the house
6. Relaying of tiles or floor
7. Installation of plumbing and alarm systems
Here, it is imperative to note that purchase of home improvement products such as furniture or electric appliances does not attract any benefits.
Moreover, on using the amount gained via a Personal Loan for home renovation you will only qualify for the benefits under Section 24, and not for those under Section 80C. The tax deduction under Section 24 is limited to a maximum of 30,000 per year for self-occupied properties, and to a maximum of 2 Lakhs a year for let-out properties.
Here again, you must be able to furnish proof of using the loan amount towards home renovation to claim the benefits.
Buying a Home Property
For Home Loans, the borrower is eligible to get a tax deduction for the interest repaid on the borrowed capital, with the maximum limit of 2 Lakhs.
Similarly, Section 80 C exempts the borrower from paying taxes on the repaid principal, with a maximum limit of 1.5 Lakhs.
However, most people are led to believe that this exemption is only available for Home Loans. The truth is, a Personal Loan taken with the aim of purchasing a house also qualifies for the afore mentioned tax benefits.
All you need to do is to provide a proof that the loan amount has been used towards making the down-payment for the home. However, you can only reap this benefit after the construction of the house is complete.
5 May 2018