Many homeowners want to renovate their existing homes. After all, their homes reflect their personalities, tastes, and preferences. However, renovation may become necessary if the flooring, walls, or roof develops mold, leakage, or seepage.
Whether you undertake home renovation to upgrade or solve the problems ailing your house, you cannot ignore the associated costs. Home renovation is a significant task, and the costs can efficiently run into lakhs. How do you pay for these costs?
A personal loan can be obtained to fund an upgrade or to meet the cost of home renovations. The personal loan eligibility criteria are simple, and you can quickly obtain the loan. You can use the personal loan EMI calculator to find the best EMI for the loan and then apply for the funds.
Home renovation loans are offered to homeowners to renovate their homes like a home loan. Aside from a personal loan, a home renovation loan is also available, designed specifically for renovation funding. Some of the benefits of the loan are as follows:
- It is a home loan with simple eligibility parameters and less documentation. You can apply for the loan online and get funds quickly.
- Home renovation loans give you funds to add to your existing home, extend its area, change the interiors or exteriors, or beautify it.
- Compared to personal loan interest rates, home renovation loans home renovation loans are cheaper. They are offered at low-ine.
- You can avail yourself of a low interest on the home renovation loan.
The tax angle makes home renovation loans the go-to solution for any upgrade or renovation. Let’s understand the tax benefits offered by the loan.
Tax benefits of a home renovation loan
The primary tax benefit offered by a home renovation loan is its interest component. The interest you pay for the loan is allowed as an exemption from your taxable income. The exemption limit is Rs.30,000, which is permitted under Section 24(b) of the Income Tax Act, 1961.
Section 24(b), however, allows a maximum exemption of Rs.2 lakhs for a home loan. This exemption includes the limit of Rs.30,000 on a home renovation loan. So, if you avail yourself of a home loan to buy a home and a home renovation loan, the maximum exemption would be limited to Rs.2 lakh. This would include a limit of up to Rs.30,000 for a home renovation loan, and the remaining amount of Rs.1.7 lakhs can be used to claim an exemption for home loan interest.
Furthermore, if two or more borrowers apply for a home renovation loan, each can claim an exemption of up to Rs.30,000 on their independent income tax liabilities.
Section 80C benefit is available only for the principal repaid for a home loan taken to buy a house. A loan taken for renovation does not qualify under this section. However, the principle that you compensate for the home renovation loan would not enjoy any tax benefits.
The bottom line
A home renovation loan, thus, gives you funds for renovating your home. Moreover, you can enjoy tax benefits on the interest you pay for the loan. This tax benefit helps in reducing your tax liability. So, if you want an upgrade, avail yourself of a home renovation loan. Get your home upgraded just as you like and enjoy tax savings.
