Introduction
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.
Summary
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!!!
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August 13, 2009 at 9:15 pm
Can I get tax benefits on the Home Improvement Loan if the house is under my father’s name?
Thanks in advance..
August 15, 2009 at 5:29 pm
HI Arjunan,
The house should be in your name.
Thanks,
Krishna
August 15, 2009 at 6:57 pm
@krishnas Thank you very much..
August 15, 2009 at 7:06 pm
Hello Arjun,
The property should be in your name or you must be the co-owner of the property if you want to get the tax benefits. It is applicable to all the time. Thank you very much for visiting my website.
Thanks,
Krishna
September 17, 2009 at 1:15 am
Dear Krishna
By Oversight, I have posted question in Eduction loan comments, could you please check and reply to me through this section, as I will be visiting these sight very frequently.
Your articles are very useful and Informative.,
Regards
V Gururajan
September 24, 2009 at 12:51 am
sir
i have taken HL of 20lacs(19lacs for purchase of house for self occupation + 1lac for home improvement). taken home loan jointly with my husband who is also co-owner of house(50%). EMI is 21500.how should we claim tax. i could not get that improvement tax point.plz give me details
February 4, 2010 at 2:26 am
Please clarify the following:
1. Can one avail regular hosing loan on one propoerty and house improvemenet loan on another property ?
2. how will be tax consideration if the second property on which the house improvement loan is obtained is not gnerating any rental income ?
July 5, 2010 at 11:19 pm
Dear Sir,
I have taken home improvement loan from LIC, I request you to clarify two thing which will help me in my tax benifit
1. will I get tax on Home improve ment loan.
2. the house is self occupied will I get HRA exemption under section 10(13A)?
kindly help me with your valuable advice
thanking you
February 22, 2011 at 5:57 pm
Dear sir i have taken home loan from two different places for the same house one from nationalize bank and other from co-operative society, can benifit for deduction of income tax ?i get benifit
March 29, 2011 at 11:44 pm
I have two properties in my name one is at Andhra Pradesh occupied by my parents and other one is self occupied in Delhi.
I took a housing loan to purchase a house in Delhi and now I am paying EMI regularly. Recently I took Home improvement loan for self occupied house in Delhi.
Can I get Income tax benefit for Home improvement loan interest + principle to deduct from the salary?
Kindly help me in this regard.
Harish