Tax Benefits of Personal Loans
The benefits of personal loans are not provided. Generally, you do not get the tax benefits of personal loans like other loans. You will not get any kind of tax deductions like a home loan. Besides that, you won’t get any benefits as well. But you can get these benefits in personal loans too if you show that you are getting tax benefits of personal loans for the following purposes.
- Buying House
- For Business Purposes
- Renovating Home
- For buying House
If you are getting the personal loan to buy a home than you will get Tax Benefits. But before that, you have to show that you are getting this personal loan to buy a house. Only then you can get these benefits. As you know section 80C and 24 deals with the tax benefits for the Home Loan. You can get a deduction in tax for the interest rates on this borrowed money. And you can claim back your principal repaid under section 80C. It is a miss-perception that you get tax benefits only in the home loans. You can get these benefits if you have taken this loan to buy a house. You while claiming for these benefits you should have some proof that you have used this amount to buy a house or to make the down payments of the house.
- For Business Purposes
If you are getting a personal loan for business purposes then also you can get tax benefits of personal loans. If you are getting a personal loan to start a new business then you can show this as an expense and claim the interest amount as an expense. In this way, it will be deducted from your business profits. And your tax will be reduced.
- For Renovating House
If you are borrowing money from the bank for renovating or repairing your house than you can also get all the tax benefits that you will get an in-home loan. But you should be able to show that you have used this amount in repairing a home or building a new balcony, paint the house or building a new room.
Hence you can get tax benefits in personal loans too if you have the proofs along with you. But usually personal loans have very high rates of interest so you are advised to get a personal loan from the right lender. Besides that, you should compare different lenders before getting the tax benefits of personal loans.
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