Homeowners avail of top up loans for buying furniture, constructing/extending, or renovating their properties. These loans are preferred because the interest rates are lower and tax exemptions. Read details about ‘is top up loan eligible for tax exemption’. below.
Consult the legal experts of NoBroker to learn more about tax exemption, here. Is home loan top up eligible for tax exemption?Home loan top up is eligible for tax exemptions under various sections of the Income Tax Act.
For the construction of a new residential property, the principal, and interest component of the loan will be eligible for a tax deduction. Under Section 80C and 24 (b), the tax exemption limit is prescribed up to Rs. 1.5 lakhs.
Under section 24 of the Income Tax Act, borrowers get a deduction up to Rs 2 lakhs on the interest paid for self-occupied properties. The property needs to be completed in a span of five years. If the eligibility is not met, the tax deduction is limited to Rs. 30,000.
Take a look at the table to know the various property types and tax exemptions.
Categories |
Section 24 |
Section 80C |
Tax Deduction allowed for |
Interest |
Principal |
Type of Property |
Any Real Estate Property |
Only Residential House Property |
Basis of Tax Deduction |
Accrual basis |
Paid basis |
Quantum of Tax Deduction allowed |
Self-Occupied Property: Rs. 2 lakhs. Non Self Occupied Property: No Limit |
Rs. 1.5 lakhs |
Purpose of Loan |
Purchase / Construction/ Repair/ Renewal / Reconstruction of a Residential House Property |
Purchase / Construction of a new House Property |
Eligibility for claiming Tax Deduction |
Purchase / Construction should be completed within 5 years |
Nil |
Restriction on Sale of Property |
Nil |
Tax Deduction claimed would be reversed if Property sold within 5 years |
Take a look at the table to know the best
home loan top up interest rates.
Banks |
Interest Rate |
HDFC Home Loan Top Up Loan |
8.30% to 9.15% p.a. |
SBI Home Top Up Loan |
7.90% to 10.10% p.a. |
Axis Top up Home Loan |
7.75% to 8.40% p.a. |
Union Bank Home Loan top Up |
6.80% to 7.35% p.a. |
BoB Home Loan Top Up |
7.45% to 8.80% p.a. |
Citibank Top Up Exist Home Loan |
6.75% p.a. |
MahaBank Top up for Home Loan |
7.55% to 8.55% p.a. |
You will need to have proof of top up loan to avail tax exemption in your Income Tax. Do remember to file your ITR at the end of the financial year.This is all from my end on is top up loan eligible for tax exemption
Read more:
How to Claim Double Taxation Relief in India? What is the difference between Pre EMI vs Full EMI? How to Claim Pension Tax Relief?
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Is top up loan eligible for tax exemption?
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2022-12-29T13:29:03+00:00 2022-12-29T13:29:04+00:00Comment
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