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How to Avail of Tax Benefits on a Loan Against Property?

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  • About a Loan Against Property

  • What Are the Tax Benefits on a Loan Against Property

  • Why You Should Apply for a Loan Against Property

Although a home loan and a loan against property may sound similar, they are quite different from each other. A home loan can be used to address either homebuying costs, or to fund a home renovation, however a loan against property comes with the prospect of many end uses – functioning a lot like a personal loan, but without the exorbitant interest rates levied. What’s more is that all you need for a loan against property is already with you – a property you can use as a collateral. And not just that, applicants opting for a loan against property can also benefit from tax benefits that come with this loan type – resulting in plenty of savings.

Some Things to Note About a Loan Against Property

A loan against property can be termed as a mortgage loan, and the loan to value ratio depends on the lender’s evaluation of your property. There are no tax cuts for a loan against property, whether the loan is used for business or personal purposes. When you get your loan against property application approved, you have borrowed money with your property acting as collateral and thus, it cannot be tax-exempt. Note that tax cuts and tax benefits mean two different things and as such carry distinct implications. 

Bajaj Housing Finance offers several attractive deals for the loan against property option. Eligible applicants can receive a sizeable loan sum of Rs.5 crore as a loan against their property to fund anything they’d like. Being a secured loan, the loan against property interest rate are a lot more affordable than their unsecured counterparts.

Bajaj Housing Finance offers a lengthy repayment tenor of 18 years to applicants basis eligibility, which gives them ample to time to comfortably repay the loan without compromising their existing and future financial plans. Read on to learn more about the loan against property income tax benefits and how you can enjoy them today. 

What Are the Tax Benefits on a Loan Against Property and How Can One Avail of These Benefits?

While the direct benefits of a loan against property is known to borrowers, many fail to take note of the tax benefits it can also afford them. Although tax benefits on a loan against property come with certain conditions, we will show you how to meet those conditions, making the process that much easier for you.

The tax exemption can be claimed on the interest paid to get the loan.  points below will tell you how to claim the various loan against property tax benefits and what don’t fall under the purview of a tax exemption.

  • If the loan amount you received from your lender is used for business reasons, then you can enjoy tax exemption from a loan against property. Concerning the interest on loan against property tax benefits, you can claim benefits against interest expended plus other fees and dues incurred in the process. You can claim this as business expenses under Section 37 (1) of the Indian Income Tax Act. 
  • Salary earners can take advantage of the loan against property income tax benefits under Section 24 (B) of the Income Tax Act if the loan amount disbursed has been used to buy a new residential building. One quick tip: salary earners are allowed a minimum of Rs.2 Lakh in loan against property tax benefits. 
  • You are not allowed to file for tax benefits on a loan against property if the loan amount is used to renovate the mortgaged building. 
  • You are empowered by Sections 37 (1) and 24 (B) to enjoy tax deductions on only the interest paid. The loan's principal amount is non-tax-deductible. 
  • When the loan amount is used for personal reasons, such as marriage, education, vacation, etc., there are no tax exemptions.
  • One major difference between a home loan and a loan against property is that you cannot enjoy tax exemption from loan against property under Section 80C which states that you can only claim a loan against property income tax benefit for completely built residential buildings.
  • When you take a mortgage on your residential building, you cannot enjoy tax benefits of any kind. 

5 Major Reasons Why You Should Apply for a Loan Against Property

The loan against property tax benefits is part of the features of the loan against property option. There are many reasons for you to apply for a loan against property, and here are 5 major reasons:

  • When you apply for this loan option, you receive a mortgage loan of great value which serves your varied needs.
  • You are allowed to repay your loan within a tenor of 18 years.
  • Don't worry about the number of documents required for the loan application process. The documents necessary are few, and if you'd like, select the doorstep option for your ease. 
  • The loan against property eligibility criteria with Bajaj Housing Finance are easy to meet and navigate. When you meet our basic requirements, your application will be processed in record time. Basic asks include a credit score of 750 and above.
  • Enjoy swift processing of your loan against property within 72 hours* of application.

So, now you know the ways in which you can avail the tax benefits on a loan against property, take advantage of Bajaj Finance Housing's lucrative loan against property deals and start enjoying the numerous tax benefits. Remember that to enjoy the tax benefits, you must have no current loans. So, click here to apply for the loan against property option that suits you today.

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