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How Can You Avail Tax Benefits from LAP
Posted on Monday, May 29th, 2023 | By IndusInd Bank
When you urgently need a hefty amount of credit, applying for a loan against property online is one of the most trusted ways to finance your significant expenses. As a secured loan, it offers several benefits, like lower interest rates, longer repayment tenures, and higher loan amounts. Besides, a loan against property puts no restriction on end-use, allowing you to cover various financial needs conveniently.
But that’s not all. When you avail of a LAP, you’re also eligible for tax benefits. In this blog, we’ll dive into the tax benefits of a loan against property and how you can avail of them.
Understanding the Tax Benefits of LAP
The tax benefits on loan against property depend on the end usage of the loan. You can claim tax benefits on LAP under sections 24(B) and 37(1) of the Income Tax Act. Let’s break it down.
Tax Benefits Under Section 24(B)
If you’re a salaried individual, you can claim tax deductions up to Rs. 2 lakhs under section 24(B) of the IT Act. However, you must use the loan amount to finance your residential property to avail of this benefit. Remember, you can only claim a deduction on the interest you pay in a financial year.
While filing your tax returns, you will have to submit the required documents to prove that you’ve used the LAP to buy a residential property.
Tax Benefits Under Section 37(1)
Under section 37(1) of ITA, you can claim a tax deduction on the LAP if you use the amount to meet business expenses. As long as you use the loan amount to fund business operations excluding capital and personal expenses, you can claim a tax deduction under section 37(1) on the interest and fees and charges of the loan against property.
Tax Benefits on Top-up Loans
You can claim tax benefits on LAP if you avail of a top-up loan. A top-up loan is an additional credit over your sanctioned loan limit. However, you must use the funds to acquire, construct, repair, or renovate a residential property.
Under this benefit, you can claim tax deductions up to Rs. 30,000 on a self-occupied residential property.
When Can You Not Claim Tax Benefits on LAP?
One of the many loan against property benefits is its versatility. You can use the amount to fund any big-ticket expense ranging from an expensive medical procedure to a luxury trip. However, in such cases, you cannot claim a tax benefit. These include-
- Remodelling or renovation of the mortgaged property
- Medical expenses
- Education
- Personal expenses like travelling, weddings, etc.
Apply for a Loan Against Property
LAP is a super convenient way to access a large amount of credit. You can quickly apply for a loan against property online from the comfort of your home. Just follow these steps-
- Visit the official website of your preferred lender.
- Navigate to the loan against property page and click on ‘Apply Now’.
- Fill out the online application form carefully and enter the correct personal information.
- Upload all required personal and professional documents like ID proof, address proof, income proof, bank statements, property documents, etc.
- Click on ‘Submit’.
That’s it. The lender will process your application and verify the information. If satisfied with your loan application, they will approve your request and disburse the loan amount directly into your bank account.
To Sum Up
A loan against property not only helps you finance hefty expenses conveniently but also allows you to claim tax benefits. As a result, you can reduce your tax liability and manage your finances effectively.
If you’re looking to get a LAP at the best interest rates in the market, apply online with IndusInd Bank today.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
