A loan against property is a secured loan that allows the borrower to mortgage a property and avail an amount which is around 70 to 80% of the property’s value. The process of Loan Against Property Documentation such a debt instrument can be utilised in purchase of a commercial property for a business. The applicant can opt for a convenient tenure of the long term and pay the EMIs regularly throughout this tenure.
As we know, there are taxes to be paid on the income and this, in addition to the EMI of the loan availed can take a toll on the financial standing of an individual. It can also have a harmful effect on the savings.
To prevent such an occurrence, there are tried and tested tax saving methods that can be employed. These tax saving methods can be applied on the interest component of the loan against property and not on the amount borrowed (i.e. the principal).
Loans availed for the purchase, construction, repair or reconstruction of a commercial property are eligible for tax deductions. These deductions are for the interest component, the processing charges as well as the expenses related to prepayment. Applicants can claim benefits upto 30% of the amount on repairs and other related expenses on an annual basis. The benefits can be availed on rented out properties and for self-occupied ones as well.
One thing worth noting here is that the applicant will not be able to claim the interest benefits on their taxable income before the construction is completed.
The benefits are specified under Section 24 B of the Income Tax Act of India.
Hence, availing a loan against property need not be a major financial setback, if planned well and managed smartly.
You can know more about availing these deductions from the resource mentioned under: Save on taxes while taking a commercial property loan
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