Save More Today Tax! Avail Top Benefits on Loan Against Property

If you are in need of some monetary support and own an immovable property, then taking a loan against it can be a viable solution. Loans against property (LAP), also referred to as mortgage loans, are secured loans in which one can borrow a significant amount at lower interest rates. But, did you know that taking a loan against property can also offer you tax benefits? Yes, you read that right!

Here are some of the top benefits of a mortgage loan tax benefits:

1. No tax on processing fee:

The processing fee charged by banks or financial institutions is providing loan against property tax benefits also. The fee can be claimed as a deduction in the year in which it is paid. This deduction can be claimed under Section 37(1) of the Income Tax Act.

2. Deduction on interest paid:

When you take a loan against property, you can claim a tax deduction on the interest paid on the loan. This deduction can be claimed under Section 24(b) of the Income Tax Act, 1961. You can claim a maximum deduction of up to Rs. 2 lakh in a financial year. This can significantly reduce your tax liability.

3. Deduction on principal repayment:

Apart from the interest paid on the loan, you can also claim a deduction on the principal repayment amount under Section 80C of the Income Tax Act. The maximum deduction that can be claimed under this section is up to Rs. 1.5 lakh. This deduction is available for LAPs taken for construction or purchase of a residential property.

4. Lower interest rates:

As mortgage loans are secured loans, they come with lower interest rates compared to unsecured loans like personal loans or credit cards. This could result in much lower interest payments and reduced overall financial stress.

Overall, a loan against property not only provides financial support but also offers significant tax benefits. But, there are a few things to keep in mind while taking a loan against property. The property should be free from litigation, and all necessary legal and financial documents should be in place. It is also crucial to make timely repayments, failing which could lead to legal complications and loss of the mortgaged property.

In conclusion, a loan against property can be a smart financial decision as it offers numerous benefits, including tax benefits. So, if you have an immovable property and are in need of some financial assistance, consider taking a LAP after consulting with a financial advisor or tax expert. Remember, making an informed decision is key to a stress-free loan journey.

Read Also: 8 Tips to Save Big on Mortgage Loan Interest Rates