Renovating an existing home is an important goal for many homeowners. After all, your home is a reflection of your personality, tastes, and preferences. Moreover, renovation becomes necessary in some cases 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 wherein the costs can efficiently run into lakhs. How do you pay for these costs?
You can avail of a personal loan to get funds for an upgrade. Loans are available to meet the cost of home renovations. The personal loan eligibility criteria are simple to avail of the loan quickly. You can use the personal loan EMI calculator to find the best EMI for the loan and then apply for the funds.
Like a home loan, home renovation loans are offered to homeowners to renovate their homes. Besides 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 type of 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 for making additions to your existing home, extending its area, changing the interiors or exteriors, and for any beautification done to the house.
- Compared to personal loan interest rates, home renovation loans are cheaper. They are offered at low-interest rates, making them affordable.
- You can avail of tax benefits on the home renovation loan.
The tax angle, specifically, 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 on 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, and it is permitted under the provisions of Section 24(b) of the Income Tax Act, 1961.
Section 24(b), however, allows a maximum exemption of Rs.2 lakhs permitted for a home loan. This exemption includes the limit of Rs.30,000 on a home renovation loan. So, if you avail of a home loan to buy a home and the home renovation loan, the maximum exemption would be limited to Rs.2 lakh. This would include the 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 of them can claim an exemption of up to Rs.30,000 each 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 for your home, avail of a home renovation loan. Get your home upgraded just as you like and enjoy tax savings too.