Loan Against Property Tax Benefits_Banner_WC
A Loan Against Property is an ideal funding solution for big-ticket expenses. Many borrowers prefer it to a personal loan because of its competitive interest rates and the considerably lower cost of borrowing. A Loan Against Property is a secured mortgage loan that lets you mortgage your property and seek a loan of Rs.5 Crore* or higher, based on your eligibility and requirements.
The prime benefit of a Loan Against Property is that it comes with no end-use restrictions, which makes it perfect for expenses that fall out of a Home Loan’s purview, such as the cost of overseas education, a wedding function, or business expansion.
Another factor to consider is the tax benefits of a Loan Against Property. When one seeks a personal loan, apart from the steep interest rates and hefty EMI payments, they also stand to gain much lesser in terms of tax rebates. A Loan Against Property allows you at least two claims under the Income Tax Act, 1961.
|Tax Provision||Income Tax Implication on a Loan Against Property|
|Tax Exemptions under 24(B)||Applicable for salaried borrowers who have used the Loan Against Property funds to buy a new residential property. The tax deductions are valid on the interest component of the repayment amount, up to Rs.2 Lakh.|
|Tax Exemptions under Section 37(1)||Applicable for borrowers who have used the Loan Against Property sanction to meet business expenses. One may claim rebates on the interest component of the loan, the processing fees, and the documentation fees as business expenses while filing the claim.|
Borrowers should note that there is no mortgage loan income tax exemption if the sanctioned loan amount is used for personal expenses, such as sponsoring higher education, planning a wedding or vacation, or paying medical bills. Furthermore, Loan Against Property borrowers will also not be eligible to seek any exemptions under Section 80C of the Internal Revenue Code.
*Terms and conditions apply
Frequently Ask Questions_TaxBenefits_WC
Frequently Ask Questions
A Loan Against property is one of the most preferred funding solution to meet big-ticket expenses. There are several tax benefits that you can enjoy by availing of Loan Against Property. Tax exemptions under section 24(B) and 37(1) can be availed of. However, tax benefits are not applicable if Loan Against Property is used for personal purposes.
A Loan Against Property allows you to enjoy several tax benefits. Tax benefits for Loan Against Property are applicable under section 24(B) and 37(1). However, borrowers cannot seek tax benefits under section 80C.
A Home Loan and a Loan Against Property both are high ticket funding options. It is not possible to convert a Loan Against Property into a Home Loan. Both the loan types are different in nature and the conditions under which they are availed of.
Interest rate on Loan Against Property starts from 8%. The interest rates are determined by several factors. Higher the CIBIL score, better the interest rates. The tenor and your desired loan amount also decide the interest rate.