Yes, there are a few home loan top up tax benefits, but they are contingent upon the specific use of the loan proceeds.
What are the Home Loan Top Up Loan Tax Benefit?
Interest Deduction under Section 24(b):
Self Occupied Property
If the top-up loan is used for repairs, renovations, or improvements of a self-occupied residential property, you can claim a deduction of up to Rs. 30,000 per annum on the interest paid. This amount is within the overall limit of Rs. 2 lakh allowed under Section 24(b) for self-occupied properties.
Let-Out Property
For properties that are rented out, there is no upper limit on the interest deduction. However, the total loss from house property that can be set off against other income heads is capped at Rs. 2 lakh per annum. Any excess loss can be carried forward for up to eight assessment years.
Principal Repayment Under Section 80C
If the top-up loan is used for the purchase or construction of a new residential property, the principal repayment qualifies for deduction under Section 80C, subject to the overall limit of Rs. 1.5 lakh per annum. However, if the loan is used for repairs, renovations, or alterations, the principal repayment does not qualify for deduction under Section 80C.
Tax benefits are only available if the top-up loan is used for housing-related purposes such as purchase, construction, repair, renovation, or improvement of a residential property.
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Well, there are many
top up home loan tax benefits available.
When you settle your personal loan or repay your gold loan, you do not receive any tax benefits. If you top up your home loan, you can receive the tax benefits on both, the principal amount and interest of your home loan.
According to section 24B of Income Tax Act, if you use top up home loan funds for the alteration, renovation or repair of your home, you can avail
top up housing loan tax benefit as
a tax deduction is available.
The principal amount and interest paid both are eligible for tax benefits under section 80C and 24b of Income Tax Act, if you use your top up home loan for constructing or buying new property.
Remember, the total deduction available is of Rs 30,000 for renovation, repair and alteration. This deduction is available within the limit of Rs 2 lakhs.
Hope this clarifies:
is home loan top up eligible for tax exemption.
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Is Tax Benefit Available on Top up Home Loan?
Aastha Tiwari
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2023-12-22T16:48:29+00:00 2025-01-13T17:51:05+00:00Comment
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