A personal loan can be considered as the unsecured loan which is beneficial for a person in immediate need of finance. The one who takes a personal loan does not need to give any security which is the ‘collateral’ to the financial institution. This is the form of an investment which provides the person with the liberty to use the money as per their need. However personal loan does not offer tax deduction like other forms of loans. It is so because it is the kind of loan which is helpful in time of emergency. But even if this form of loan, does not provide any tax deduction but provides tax benefits. Therefore if one is seeking for personal loans with benefit, then he or she must consider the things listed below.
When one is purchasing a house
The tax benefits for home loans are mentioned in Section 80C and Section 24. One can get a tax deduction on the interest that they are supposed to pay on the money they have borrowed. The tax limit for Section 24 and Section 80C is different. In Section 24 the tax limit is two lakhs while in Section 80C the tax limit is one point five lakh.
One must know that while taking a personal loan for buying a house, one can also claim for tax benefits that apply to the home loan. However, one must need to prove that they are using the money for buying a house and not investing it anywhere else. They also must back it with proper evidence.
Using the loan for renovating the house
The tax benefit that is meant for buying a house is also applicable for the renovation of the home. If one is, therefore, planning to take a personal loan for redecorating their house, then they must provide the necessary documentation to the financial institution and get the tax benefits that come along with this loan. However one cannot buy furniture and appliances with the money received from this loan. This will happen under the tax benefit of Section 24. The limitation of the tax deduction is two lakh per annum.
For business purpose
When a business person takes a personal loan for the business under his name, then he or she has the liberty to regard the personal loan as an expense. This is where it helps in claiming the interest amount as an expense. Hence this will be beneficial in reducing the taxes.
Even if one takes the loan to buy shares, this adds up to the cost of the acquisition and deducts the tax.
One can also look out for personal loan online. This will give them detailed information and benefits one can derive from a personal loan. With knowledge, they can make a wise decision about their financial commitments. Also, it will help them select the loans and claim for the benefits.
Besides with the numerous facilities given by the banks, one can also get financial help through personal loan online. The opportunity of getting loans online has made the process of obtaining financial support simple and less time-consuming.
Therefore this information about tax benefits can help an individual to claim the tax benefit as per their need. Besides they can use it for the appropriate purposes and also save the documents beforehand that they might need while getting the loan. However one must always compare among the financial institution to get hold of the best deal.