Loan Against Property: Major Tax Benefits At A Glance
A loan against property proves to be a saving grace for people who are looking to generate low-interest funds. However, they usually fear to have to pay high tax percentages.
The Loan Against Property Interest Rates are quite low, thus gives the option of better repayment.
It is generally because filing tax returns is a significant part of everyone’s financial routine and cannot be skipped.
Paying tax is something which can set you back drastically when it comes to your yearly income.
The only way to move around a situation like this is by gathering knowledge about loan against property tax benefits.
There are a number of deductions that you can claim for your loan against property in India.
It is done, so that, you do not end up giving a major chunk of your income to the Government. It also allows you to gain more financial stability.
In this context, let’s will share some of the primary loan against property tax benefits that you can claim for the next year.
Monthly Installments
One of the most significant loan against property tax benefits that you receive is regarding the monthly installment.
The amount that you end up paying to the bank is usually deducted out of your income.
That is why it can be claimed while filing your tax returns. It gives you the solace of saving a certain percentage of your hard earned money at the end of each year.
The deductions on principal amount can be claimed up to Rs.2 Lakhs a year according to the Section 80C of the Income Tax Act.
Interest Percentage
Whether you are paying a high interest rate or a low one for your loan against property eligibility, you can still claim it during the return filing process.
As of the current year, the Government of India has decided to allow borrowers to request interest rate as a loan against property tax benefits.
It is in relativity to the section 24B, which states that interest paid on loan against property is exemptible.
One might feel that it would not be such a big difference to your financial situation.
However, when you add it up over the course of an entire year, the amount becomes substantial.
Additional Read: 5 Facts Must Be Considered About Mortgage Loan Interest Rate Tax Deduction
Property Type
People take a loan against property for different reasons including commercial, industrial, and residential uses.
With the help of loan against property tax benefits, you will be able to claim the necessary deductions under all three categories.
The interest rate is subjected to deductions depending on its ultimate usage.
It means if you can prove that there is a link between the borrowed amount and its utilization, then you can claim loan against property tax benefits than general.
Usage Type
A loan against property can be either for personal use or business. It all depends on the requirement of the borrower as well as the availability of the resources.
Apart from this it is sometimes even subjected to the loan against property documents required.
However, if you are using a financing service, for fulfilling business requirements, then you can claim the necessary expenses of processing and documentation as the loan against property tax benefits.
On the other hand, if the loan amount is used for personal expenses, then the same cannot be exempted during the tax filing process.
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Category: Debt
