We all love decorating our houses because it turns them into homes. It is like breathing a new life into your space and making it more comfortable and as attractive as you wish it to be. However, home renovation can burn a hole in your pocket for it is often expensive. Because there is a lot of demolishing and dismantling involved in the process where labour has to work day and night with proper planning. But what can you do when you need to renovate the house before a festival or a significant function and you are short on funds?
Well, in such cases, you can always avail a home renovation loan. Apart from making your home more comfortable and attractive, these home makeover loans can provide you with many potential tax benefits. So, in this article, we will be understanding the basics of home renovation financing and the tax benefits associated with it.
What is a Home Renovation Loan?
As mentioned earlier in the introduction, home renovation loans are loans which you take from various financial institutions or banks for the makeover of your house. These loans are specifically designed to help you fulfil your home renovation goals. Hence, they cover everything ranging from refurbishing your drawing room to fixing leaks and giving your kitchen a modern facelift to painting the walls of your house. These loans, overall, offer a convenient way to finance your projects without draining your savings.
Tax Deductions On Home Renovation Loan
When you opt for a home renovation loan, you not only give your home a makeover but also open the door to potential tax benefits. Yes! There are various tax benefits you can avail by taking home renovation loans, and save quite a lot of money in a year. The government provides these incentives to encourage homeowners to invest in their properties as it in some way contributes to the economic growth of the nation. Here are the tax benefits of home renovation loans:
Interest Deductions
One of the primary advantages of a home renovation loan is the deduction on the interest paid. The interest of your home renovation loan amount is eligible for tax benefits under Section 24(b) of the Income Tax Act. This means you can reduce your taxable income with the help of the interest paid on the loan during a financial year. However, keep a note that the maximum amount allowed for deductions is ₹30,000. So, this is how your house repair tax savings work.
GST Benefits
Yes! You also have GST benefits on home renovation loans. Goods and Services Tax, otherwise called GST, is a significant aspect of any financial transaction, whether it is home renovation loans or any other kind of loan. So, when you take a loan for renovation, the GST paid on various goods and services related to the project can be eligible for tax benefits. Under the Input Tax Credit (ITC) system, the GST paid on raw materials, labour, and other services can be balanced against the GST on overall service. This helps in reducing the overall tax burden associated with your home improvement.
Also Read:How Much Instant Cash Loan You Can Get Based On Your Salary?
Other Reasons to Go for a Home Renovation Loan
Apart from these tax benefits, you also have the following reasons to opt for a home renovation loan:
Low Interest Rates
You do not need to pay higher interest rates on home renovation loans as the interest rates are quite competitive in comparison to what you would get with credit cards and other loans. Hence, your overall costs would be much lower than what you would expect them to be.
Quick Disbursal
Home renovation personal loans can be disbursed quickly in comparison to other types of loans, especially if you opt for online loans.
Minimal Documentation
Home renovation loans often get approved with minimal documentation. More often than not, you just need the application form, income proof, bank statements, passport-size photos, and identity proof to get the home renovation loan.
FAQs
1. What costs are covered by home renovation loans?
The major costs covered in a home renovation loan include services for painting, fixing leaks, updating fixtures, and remodelling rooms. It can also include costs for adding new rooms, upgrading the kitchen, restructuring the washroom, etc.
2. Who can apply for a home renovation loan?
Anyone who owns a house and wishes to make improvements can apply for a home renovation loan. However, the applicant needs to meet the loan eligibility criteria to get the funds. Anyone above 21 years of age with a minimum monthly income of ₹15,000 and a good credit score can apply for a home renovation loan with CASHe.
3. How much home renovation loan tax benefit do you get?
You can get a tax benefit of up to ₹30,000 on the interest you pay for a home renovation loan. This can help lower your taxable income and save you money on taxes.
