You may take a loan against property either for personal use like wedding, medical bills, vacation or for business purposes. The best part is that the interest rates on loan against property are low in India.
Apart from low–interest rates on loan against property following are the benefits that you may reap from tax exemptions:
- Under Section 24 of the Income Tax Act, the lid is put on INR 2 lakhs if you have applied for the loan against property to construct/renovate your house.
- You can also claim tax deductions up to INR 1.5 lakhs (on principal repayment) and up to INR 2 lakhs (on interest repayment) but only if you plan to buy another home. In such a case, please make sure to learn about rules and regulations that are applied for the purchase of any property.
- Under the Section 80 C, you may claim tax deductions for up to INR 1.5 lakh to pay the tuition fee of your child/children if you have applied for the loan against property for the education of your child/children.
- Under the Sections 80DD and 11DD you can also claim tax deductions on medical bills up to INR 75,000 and INR 40,000 (in case of dependents) /INR 1,00,000 (in case of senior citizens) respectively. However, make sure to check all the rules and policies for the payment of various medical treatments offered the hospitals.
The processing charges for loan against property vary from one financial institution to another. The processing charges for loan against property in India are minimal and may be up to 1.5% but it is advisable that you ask your issuer about it including the documents required while applying for a personal loan.
Additional reads: A Detailed Guide on Charges and Fees for Loan Against Property