In this article I will be writing about the home improvements loan and how one can get the maximum tax benefits on the home improvements loan. Many people not aware that you can apply for the loan if you are willing to reconstruct the existing house. More than that you are eligible to claim the tax benefits on the loan. This article will explore some of the facts on home improvement loans and how to utilize the tax benefits. Please post your comments after reading the article. You can subscribe to our future articles here. Read home loans articles to know more about the home loans and tax benefits.
What is Home Improvement Loans?
Typically home improvement loans are used for extending the existing homes like constructing balcony, kitchen or even you can use that money to paint your house or beatification work. It will be just work like the home loans when in the home loans you will have to work with builders here the money goes to construction contractors. To avail the home improvement loans first you have to estimate the amount required for extending the house and then submit the plans to your financier(bank). They will be verifying with the constructors about your estimation and vist your home. Some banks will sanction the loan only if you submit the receipts of payment to the contractors.
Tax Benefits on Home Improvement Loans
- The good thing is you can claim the tax benefits for home improvements loan as like the home loans.
- There is an income tax benefit on the interest component of the home improvement loan up to Rs 30,000 under Section 24 of the Income Tax Act, if it is self occupied.
- In case of the property is rented out, there is no limit on the tax deduction. For example if you have to pay the total interest on the home improvements loan as Rs.195000. The total income from the rented house is Rs.100000. Then you will be eligible for the tax deduction of Rs.95000 (195000-100000). Note that this exemption is not coming under the allowed limit of Rs.150000 for home loans interest. That is the separate component on income tax act.
In this article I have written about the home improvement loans and the tax benefits on the loans. This would help many readers to make awareness on the other areas on the home loans part. I would like to answer all your questions posted on the comments section. Thank you for the reading!!!
You can subscribe to our future articles here.