Some loans come with tax benefits. What it means is that while you are building your assets such as a home or a car thanks to a personal loan, you can also earn monetary kickbacks as added perks! Tax benefits on loans can be applied to various financial goals such as increasing your savings or for paying off the interest on a home loan.
People usually tend to look at a loan as a drain on their pocket because many lenders levy charges, high interest rates and penalties. However there are some NBFCs such as Bajaj Finserv that offer transparent loans online , at a low interest rate and even give you 3 months to get your finances sorted before repaying EMIs! On this note, allow us to introduce another benefit to take a loan, i.e. the tax saving angle.
If you wish to be financially smart and value your hard earned money, then you may want to consider benefits on your taxes based on the type of loans you wish to avail. Various types of loans fall within different brackets and allow you a certain tax benefit. Read further to understand the type of loan and tax benefits it brings.
Tax benefits on personal loans
A personal loan is highly beneficial in emergency situations and unforeseen circumstances. Bajaj Finserv offers personal loans at interest rates that are among the best in the country! Bajaj Finserv allows you to apply online for a personal loan from the convenience of your home or office. Bajaj Finserv also offers personal loans of up to 25 lakhs for salaried professionals. Plus, instant approval and online account management ensure easy access to all your financial data. Bajaj Finserv’s personal loans qualify as a viable solution for all your personal needs!
If you are wondering about tax deductions on a personal loan you wish to avail, let us inform you about the advantages you can enjoy.
- For personal loans, deductions are applicable exclusively for a declared business and its remuneration.
- Deductions on taxes can be applicable on the interest on personal loan repayments used for property construction.
While this is a broad overview, it is useful to be informed about loan tax benefits if you are starting to get a loan or if you are already repaying one.
Tax benefits on home loans
Every one wishes to own a home these days. Home loans are available online for salaried and self-employed individuals. Home loan interest rates are usually lower than other forms of mortgage owing to their longer tenure. Non-banking financial companies like Bajaj Finserv offer Home Loans with low interest rates on online applications. With low-interest rates, you are assured of stable monthly expenses and a better control over your loan repayment. Bajaj Finserv allows you to apply online for a Home Loan.
There are some tax advantages to a home loan. Let’s explore them:
- If you use the personal loan towards the down payment for the purchase of a house, then you can claim tax exemption.
- If you use the loan amount to pay for home repairs, renovation, or for reconstruction, then all these are also considered valid expenses for tax deductions.
- Section 24(b) of the Income Tax Act provides relief to homebuyers giving them tax deductions on loans taken to buy a residential property or to renovate it.
- Sometimes you can claim tax deductions on the interest paid on the home loan even if you cannot claim deduction on the principal amount of the loan. If you are living in the house on which you spend the money taken as loan, you can claim tax deduction for interest amount up to INR 1,50,000. For a house that has been rented, there is no limit on the interest amount that can be claimed. For more on tax benefits on a home loan, refer this post.
- In case you wish to purchase your second home, there are tax relief options one can take advantage of. It is important you educate yourself on home loan tax benefits for your second home.
Once you are aware of the loan type you wish to secure for your home purchase, you can apply the relevant tax benefits to your home loan. Do remember that sometimes employing the personal loan for your house can do wonders if you are aiming to avail of tax deductions.
Tax benefits on loans against property
A loan against property (LAP) is a loan that is given against the mortgage of property. The loan is provided at a certain percentage of your property’s market value, usually somewhere between 40% and 60%. If you are looking for a loan against property, click here for all you need to know about a loan against property. If you contact Bajaj Finserv, they can provide you with a loan of up to 21 crores on your property. Normally, a home loan is eligible for exemption u/s 80C & 24(b) respectively. However if you have mortgaged your house to avail loan against property, there is no exemption. The advantage to a loan against property in this instance is that the LAP interest-rates are usually lower than that of other loans. Take a look at the rates offered by companies like Bajaj Finserv to see a classic example.
How to apply for a Hassle Free Loan
Good financial lenders allow you to experience a hassle free loan application process by making it accessible online. You are allowed to file your application at your convenience and present documents by uploading them online as well. Further, if you meet the eligibility criteria, then you can also gain a quick approval for your application. Below is a sneak peek into how to apply for a hassle free home loan as well as a personal loan.
- Home Loans: Bank website provides facility to avail instant approval of a home loan. You may avail e-approval even before finalizing your property. Online sanction has the additional benefits.
- Personal Loans: Personal loans are very popular financial instruments for riding a short-term financial crunch. They are a genuine aid in emergencies, as one can avail this product with minimum documentation and without any collateral as security. Apply for a personal loan today.
Loans taken wisely and within our limits would save us from a never-ending spiral of debt. Apart from helping you achieve your goals and gaining peace of mind, the beneficial side of a loan is the tax saving which reduces your overall burden considerably.