A mortgage loan is a type of secured loan where the borrower can avail a loan against a mortgaged property. including home loans and loans against property, these loans are offered at competitive interest rates compared to unsecured loans such as personal loans, business loans, etc. A salaried individual can avail a loan against property amount ranging up to Rs.1 crore while self-employed are eligible for mortgage loan amounts of up to Rs.3.5 crore from top financiers.
Lenders offer flexible tenors on loans against property ranging up to 20 years. Moreover, borrowers should also know how mortgage loans are tax-deductible in India to avail further financial benefits.
Tax benefits on loans against property
Borrowers can claim tax exemptions on the interest component of their mortgage loan EMIs under the following tax heads –
- Section 37(1)
As per Section 37(1) of the Income Tax Act, borrowers can claim tax exemptions if the borrowed funds are used for business-related expenses. Tax benefits can be availed against payable interest and associated charges incurred on loan against the property process.
- Section 24(B)
If the loan amount is used for the purchase of a residential property, borrowers can claim tax deductions up to Rs.2 lakh on the annual interest payable, according to Section 24(B) of the Income Tax Act.
However, borrowers will not be allowed to avail tax exemptions if the loan against property amount is used for personal expenses such as marriage, vacation, education, etc.
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