People wish to make their houses as amazing as possible. From adding more items to giving it an aesthetic touch, there are numerous options. However, any of these choices will require a significant financial investment. Using your savings or breaking your investments will not be a smart idea. Opting for a personal loan (PL) for home improvement is a better choice.
The best part is that you don’t need to use your home as collateral against personal loans, and you can make upgrades at reasonable interest rates. Alongside, it also provides you with tax benefits. This article will tell how you can avail tax benefits on personal loans for home improvement projects.
Significance of Personal Loans For Home Improvement
A personal loan can help you upgrade your home. Several homeowners take personal loans to install heating system replacements, solar water heaters, insulation systems and tube wiring.
You can also take advantage of a PL to bring more necessary items or make your house more appealing.
Acquiring a personal loan for such home upgrades is best for you if:
· You want to maximise your short-term cash flow and not use your long-term savings/investment for home upgrades
· You don’t have a bulk arrangement to cater to such expenses, and even if you do, you would like to use it for other purchases
· You are not interested in pledging your home as collateral
· You are looking for tax exemption advantages
Tax Benefit on Personal Loan for Energy-Efficient Home Upgrades
One of the primary reasons modern homeowners prefer taking a personal loan for home upgrades is to avail tax benefit on personal loan. It is clearly understood that a personal loan doesn’t attract many tax exemptions when used for other purposes like medical emergencies, planning a wedding or a vacation, or using it for any personal purchases.
However, when you use a personal loan to make improvements or renovations in your home, you can get tax exemptions. The principal amount you pay towards your loan the whole financial year is eligible for a tax exemption up to Rs 1.50 lakh under Section 80C of the Income Tax (IT) Act.
If you take a personal loan for renovation, you can get tax deductions of up to 2 lakh in one financial year under section 24 of the IT Act. However, note that only the homeowner is eligible to claim this.
Benefits of Using Personal Loans for Energy-Efficient Home Upgrades
Given below are several benefits that personal loans offer when you use them for home upgrades:
Hassle-Free and Quick Disbursal
Getting a personal loan is straightforward now. You can apply digitally within minutes. You only need to verify the documents, meet eligibility requirements, and complete the KYC. By following these simple steps, you get funds in your account in no time.
Unsecured Loans with Unrestricted Usage
One of the best features of applying for these unsecured loans is that there is no restriction on using the loan amount. Once you use a part of the loan to upgrade your house, you can use the remaining amount for other personal or professional purposes.
Flexible Loan Tenures and High Loan Amounts
Personal loans for home improvements come with flexible tenures and easy repayment terms. You can avail these loans for up to 10 years and enjoy a high home loan amount.
Improved Value of Your Home without any Upfront Costs
Taking a personal loan to renovate your home turns your living space into an upgraded haven, increasing your residential space’s worth. The best part is that you don’t have to pay upfront and can make the necessary transformations with easy EMIs.
Improved Credit Score
The approval of personal loans, credit cards, and all other funding and financing options rely primarily on your personal CIBIL score. The credit rating ranges between 300-900, depending on your credit repayment history and how you manage your financial portfolio. Once you take a personal loan and pay your monthly EMIs on time, it eventually helps you build your credit score.
Conclusion
Upgrading your home and making it more energy efficient, with the help of a personal loan, is a smart choice. You not only get the finances to manage home upgrades without using your savings, but you also get the benefit of saving taxes. Explore various financial options across the online and offline markets and settle for the best one that offers you low-interest rates and quick disbursals.