I am planning to take a home improvement loan. Can you please state the tax benefits I’ll get out of it?
Home improvement loan does have tax benefits.
- Under Section 24 of the Income Tax Act, the interest paid on the home improvement loan is tax deductible up to Rs 30,000 per annum.
- Both the owner and co owner are eligible for tax deduction on the interest paid on home improvement loans.
If you want to go for a Home Loan for renovating, repairing or making alterations to your residential property, you can claim tax deduction on the interest paid on such a loan. You can make the claims under Section 24B of the Income Tax Act. The amount that you can claim is capped at Rs.30,000 a year, and not Rs.2 lakh, as is the popular perception. Note that this Rs. 30,000 will come under the Rs. 2 lakh limit for the section. This means that if you are already claiming Rs. 2 alkh for another Home Loan under this section, you cannot claim this Rs. 30,000. So, the total interest that you can claim (Home Loan plus home improvement loan) will be Rs. 2 lakh.
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