How Much Tax Benefit Can be Availed on Loan Against Property

Pledging your residential or commercial property for availing a loan is a well-established practice in India. When you cannot get an unsecured loan like a Personal Loan or a Credit Card Loan, Loan Against Property can be a good option. It provides access to funds while also giving you tax benefits. Read on to know the tax benefits available when you avail a Loan Against Property.

Tax Benefit under Section 24(B)

Salaried individuals can avail income tax benefit under this section against their Loan Against Property. If you're using the loan amount to buy, build or renovate a residential property, then you are eligible for tax deductions up to ₹ 2 lakh. However, construction or purchase should be completed within 5 years of taking the loan to enjoy this benefit. Please note that only the interest payment of the loan can be claimed as deduction. 

Tax Benefit under Section 37(1)

Tax deductions under Section 37(1) are applicable when the loan amount is used for business purposes. You can claim tax benefits on the interest charges, processing fees, as well as documentation fees that you would incur as a business expenditure.

No tax exemptions allowed in the following scenarios

In case your loan amount is used for education, marriage, travel or medical bills, there is no tax exemption available.

No Tax Benefit under Section 80C

Please note that while Section 80C of the Income Tax Act allows deductions for several purposes, including for principal repayment of Home Loans, there are no tax benefits under this section for Loan Against Property.

Conclusion

The tax benefits mentioned above are helpful and can help ease your loan repayment burden, making Loan Against Property more affordable and practical for both personal and professional needs. Any salaried or self-employed professional can apply for an ICICI Bank Loan Against Property. To apply for the loan, visit the ICICI Bank website or any ICICI Bank Branch.

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