New Delhi: Home Renovation: We all know that we get income tax exemption on home loan. Due to which our tax burden is reduced. But you should also know that loans are also available for home repairs, renovations and on that too you can take advantage of tax exemption.
For what purposes can you take a home loan?
If you also want to get your home repaired, then banks
You also get a loan from the bank for interior decoration. You also get a loan for installing tiles in the bathroom or kitchen. It also includes all types of plumbing expenses. You can also take a loan to buy electronic equipment for home use.
Loan is not available for these works
According to the income tax rules, whatever is covered under Home Improvement Loan, all of them get income tax exemption. However, there are some expenses on which you do not get tax exemption, such as if you want to have a fireplace in the house or want to build a swimming pool, then you do not get tax exemption.
Tax Rules on Home Improvement Loan
If the property is let out, then you can get only 30% of the total rent in the name of maintenance of that property, irrespective of the amount you have spent. That is, suppose if you get Rs 2 lakh as rent, then you can spend only Rs 60,000 on the maintenance of that property.
If you yourself live in the same house, then you do not get any exemption in the name of maintenance. Home Improvement Loan is not meant for regular expenses for maintenance. If you take a loan for home renovation or improvement, then it definitely helps you in reducing capital gains.
Help in reducing capital gains
If you live in that house for more than two years, you can actually deduct the home improvement loan directly from the capital gains. Under Section 24(b) of the Income Tax Act, 1961, if you have taken a home improvement loan, then you can deduct the annual interest up to Rs 30,000 from your income. If the house is a joint then both the owners of the house can take advantage of this amount of tax exemption.
However, this amount of tax exemption will come within the total limit of tax exemption on home loan interest, which is Rs 2 lakh. If you are planning to sell the house, you can add the home improvement expenses to the value of the property while calculating the capital gains. This will help you in reducing capital gains.