Personal loan – Tax Deductions
A personal loan can be taken for any use like financing wedding expenses, medical expenses, trips, renovation or construction of the house, etc. But a personal loan cannot be taken for speculative purposes. However the lenders are not anxious with the use of the loan and no need of guarantors or collateral.
Is the Personal Loan Tax Deductible? The principal repaid does not qualify for tax deduction benefits.
However, under Section 24 of the Income Tax Act, the interest paid for a personal loan taken for acquisition, construction and renovation of the house can be claimed for tax deduction up to Rs. 1.5 lakh. The borrower can claim tax benefits only after the completion construction and possessing the property.
While claiming deduction the borrowers may need to show the certificate of completion of construction of house property. If this is not available then the proof of occupation by a certain date such as electricity bills, telephone bills etc. can also serve as a good proof of completion and occupation.
Thus you can fulfill your dreams by taking a personal loan and also claim tax deduction benefits.