Want to Maximize Your Savings and Enjoy Tax Benefits? Consider These Three Options with Refer Loan! Read Now
At Refer Loan, we believe that loans can be a great way to finance various personal and professional needs. Whether it’s for a home, education, or personal expenses, loans provide you with quick access to funds.
In addition to providing you with financial support, loans can also offer tax benefits. The interest you pay on a loan can reduce your tax liability by increasing your cash outflow. And some loans, like education loans, even come with tax exemptions.
Here are three loans that can help you save money on taxes:
Home Loan
A Home loan is a loan taken to purchase a house. If you take a home loan to buy a house, the amount you repay towards the loan (principal and interest) can be claimed as a tax deduction.
Under the Income Tax Act, you can claim tax deductions on your home loan repayments. The principal repayment can be claimed under Section 80C, with a maximum deduction of Rs. 1.5 lakh per year. However, this benefit cannot be claimed for properties that are under construction or for properties that are sold within 5 years of possession.
For the interest repayment on your home loan, you can claim a deduction under Section 24 of the Income Tax Act. If the property is self-occupied, you can claim an exemption of up to Rs. 2 lakh, provided the construction of the property is completed within 5 years. If the construction takes longer, then you can claim a deduction of only Rs. 30,000. For a second home loan, the time frame to claim the interest deduction is reduced to 3 years.
If you rent out the property and don’t occupy it, there is no limit to the exemption you can claim. If the loan was taken for the construction of the property, the interest can be claimed in 5 equal installments for 5 consecutive financial years, starting from the year the construction started to the year you get possession.
As a first-time homebuyer, you may be eligible for an additional tax deduction of Rs. 50,000 for the interest repayment on your home loan under Section 80 EE. To avail this benefit, the cost of the house should be less than Rs. 50 lakh and the home loan should be less than Rs. 35 lakh.
For example, if you take a home loan of Rs. 30 lakh to buy a house that costs Rs. 50 lakh, you can claim a tax deduction of Rs. 3 lakh in the first year if you repay Rs. 2 lakh towards the interest and Rs. 1 lakh towards the principal. These tax deductions can help reduce your taxable income and lower your tax liability.
Education Loan
Education loans can be a great way to finance your or your loved one’s higher education. But did you know that in some cases, you may be eligible for tax benefits as well? That’s right! When you take out a loan for education, the interest you pay on it can be used to reduce your tax liability.
To be eligible for the tax benefits, the loan must be taken for your own education, or the education of your spouse, children, or any child for whom you are a legal guardian. The tax exemption is available under Section 80E of the Income Tax Act and is based on the interest you pay on the education loan. The amount of tax exemption you can claim is unlimited, and it can be claimed for up to 8 years of loan repayment.
Here’s an example to help you understand how this works. Let’s say you take out an education loan of INR 2 lakhs, and the interest rate on the loan is 10% per annum. In this case, you would have to pay INR 20,000 as interest every year. If your taxable income is INR 10 lakhs, the interest payment of INR 20,000 would reduce your taxable income to INR 9.8 lakhs. This would, in turn, reduce the amount of taxes you would have to pay.
In conclusion, if you’re planning to finance your or your loved one’s education, consider taking an education loan to take advantage of the tax benefits.
Personal Loan
Personal loans are often used for personal expenses, such as travel, holidays, medical bills, hospital charges, and weddings. Unfortunately, these expenses do not provide any tax benefits.
However, if you use your personal loan to purchase an asset or to invest in your business, you may be eligible for tax deductions based on the loan repayment.
For instance, if you buy assets like jewelry, stocks, or real estate using the funds from your personal loan, you can claim deductions only when you sell these assets. The interest you pay on the loan becomes the cost of acquiring the asset, and you can subtract this cost from your taxable income when you sell the asset. You can claim this deduction in the financial year corresponding to the sale.
With a flexible personal loan from Refer Loan, you can get more favorable repayment terms, including a lower interest rate, which can help you reduce your monthly EMIs.
It’s important to carefully consider the benefits and drawbacks of taking a personal loan before applying.
Make sure to only borrow what you need and can afford to repay, and be sure to understand the terms and conditions of the loan. With a flexible personal loan from Refer Loan, you can finance your expenses and potentially receive tax benefits in the process.
Looking for a loan that can help you finance your big-ticket expenses without putting a strain on your budget? Look no further than Refer Loan! Our personal loans are designed to offer you the best of both worlds – affordability and convenience.
Here are some of the benefits you’ll enjoy when you apply for a personal loan with Refer Loan:
- Minimal Documentation: We understand that the loan application process can be a hassle, especially if you’re required to submit a lot of paperwork. That’s why we’ve made it our mission to simplify the process as much as possible. With Refer Loan, you’ll only need to provide a few basic documents, and you’ll be on your way to getting the funds you need in no time.
- Collateral-Free Loans: Don’t want to put your assets at risk? No problem! Our personal loans are collateral-free, which means you won’t have to put up any of your possessions as security to get the funds you need.
- Instant Loan Disbursal: We know that when you need money, you need it fast. That’s why we’ve designed our loan application process to be as quick and efficient as possible. With Refer Loan, you can get your loan funds in as little as 24 hours.
- Tax Benefits: If you use your personal loan to purchase an asset or invest in your business, the interest you pay on the loan may be tax deductible. This means you can enjoy even more savings on your loan, making it even more affordable.
So why wait? Apply for a personal loan with Refer Loan today and start taking control of your finances!