{"id":3812,"date":"2022-06-21T13:24:14","date_gmt":"2022-06-21T07:54:14","guid":{"rendered":"https:\/\/homefirstindia.com\/?post_type=article&#038;p=3812"},"modified":"2025-02-14T10:12:57","modified_gmt":"2025-02-14T10:12:57","slug":"tax-benefit-on-top-up-loan","status":"publish","type":"article","link":"https:\/\/homefirstindia.com\/mr\/blog\/article\/tax-benefit-on-top-up-loan\/","title":{"rendered":"Tax Benefit on Top Up Loan"},"content":{"rendered":"<p><img decoding=\"async\" class=\"size-full wp-image-3813 aligncenter\" style=\"width: 100%; max-width: 500px; height: auto;\" src=\"https:\/\/homefirstindia.com\/app\/uploads\/2022\/06\/Tax-Benefit-on-Home-Loan-Top-Up.png\" alt=\"Top Up Loan\" \/><\/p>\n<p style=\"text-align: justify;\">A typical home loan offers tax benefits such as a deduction of up to Rs. 1.5 lakh on principal repayment under section 80C of the Income Tax Act and a deduction of up to Rs. 2 lakhs on interest payments in a financial year under section 24 of the Income Tax Act. You can also claim a tax benefit if you have taken out a home loan balance transfer. But first, let&#8217;s define what a <a href=\"https:\/\/homefirstindia.com\/article\/top-up-loan\/\"><strong>top-up loan<\/strong><\/a> is.<\/p>\n<h3><strong><span data-preserver-spaces=\"true\">What is a Top-Up Home Loan?<\/span><\/strong><\/h3>\n<p style=\"text-align: justify;\">A home loan top-up is an additional loan amount that a borrower can get on top of their existing home loan. The maximum loan amount and term permitted by the top-up loan product vary per lender. Customers can get a top-up loan from their existing lender or transfer their money to a new lender via a balance transfer.<br \/>\nTaking up a top-up loan is preferable to taking out a personal loan because it has a lower interest rate and requires less documentation. As a top-up loan, up to 70% of the property&#8217;s market value can be obtained.<\/p>\n<p><iframe loading=\"lazy\" title=\"Home Loan Eligibility Calculator | How to Calculate Home Loan Eligibility | HomeFirst\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/MCAbC8o8EyY?start=2&#038;feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<h3><strong><span data-preserver-spaces=\"true\">How do Tax Benefits on Top-Up Home Loans Work?<\/span><\/strong><\/h3>\n<ul>\n<li style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">Providing proper documentation for your top-up loan&#8217;s usage in acquiring, building, repairing, or renovating your residential property can help you with tax savings.<\/span><\/li>\n<li style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">A regular home loan allows for a maximum deduction of Rs 2 lakh on interest payments. Top-up loans dedicated to repairs and alterations qualify for a maximum tax deduction of Rs 30,000.<\/span><\/li>\n<li style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">Only a self-occupied house is subject to the Rs 30,000 limit. There is no limit to the amount of deduction that can be claimed if the repairs and renovations were done on a rented property.<\/span><\/li>\n<li style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">The amount of tax relief on principal repayment is determined by how the funds are used. If the funds are used to particularly, build or buy a new home, the principal and interest will be eligible for tax deductions under sections 80C and 24(b) of the Internal Revenue Code, respectively.\u00a0<\/span><\/li>\n<li style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">Also, you cannot claim a deduction on principal repayment of your loan if you use the funds for repairs or renovations.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: justify;\">In the long run, a top-up loan on a home loan with a tax exemption can help to reduce the repayment load.<\/p>\n<h3><strong><span data-preserver-spaces=\"true\">Tax Benefits on Top-Up Home Loans<\/span><\/strong><\/h3>\n<p><span data-preserver-spaces=\"true\">Let&#8217;s take a closer look at the tax incentives available under these parts of the <a href=\"https:\/\/homefirstindia.com\/article\/section-24-of-income-tax-act-check-deduction-for-home-owners\/\"><strong>Income Tax Act<\/strong><\/a>.<\/span><\/p>\n<h4><strong><span data-preserver-spaces=\"true\">Section 80C of the Income Tax Act<\/span><\/strong><\/h4>\n<p style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">The highest allowable deduction is Rs. 1.5 lakhs. The primary amount is the subject of this section, which gives tax benefits. This provision of the Income Tax Act allows an individual to deduct income tax paid to repay their principal loan amount. This provision allows you to claim deductions for amounts paid towards fixed deposits, senior citizen savings plans, Public Provident Fund (PPF), national saving certificates, and other authorized deductions. However, note that exceeding the limit of Rs. 1.5 lakhs disqualifies you from claiming any tax deduction on the exceeding amount. Only if the construction is finished may you claim a tax reduction. This clause does not provide for tax benefits for properties that are still under development.<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">So, if the assessee has received tax benefits in the form of deductions, the property cannot be transferred. Section 80(5) of the Income Tax Act imposes this provision. Property owners must wait at least 5 years from the end of the assessor&#8217;s control year before transferring these properties.<\/span><\/p>\n<h4><strong><span data-preserver-spaces=\"true\">Section 24 of the Income Tax Act<\/span><\/strong><\/h4>\n<p style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">The tax benefit on the interest paid on a home loan is available under this clause. A maximum deduction of Rs. 2 lakhs is available to the borrower. If the home was not purchased for self-occupation, however, there is no maximum limit. The property must be completed within 5 years; otherwise, the deduction amount will be decreased from Rs. 2 lakhs to Rs. 30,000.<\/span><\/p>\n<h4><strong><span data-preserver-spaces=\"true\">80EE of the Income Tax Act<\/span><\/strong><\/h4>\n<p style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">First-time home buyers benefit from Section 80EE of the Income Tax Act, which allows for a tax deduction on the interest paid on a house loan. For first-time house loan borrowers who make interest payments on their home loan, an additional amount of Rs. 50,000 is allowed. This additional leverage of Rs. 50,000 will be in addition to the deductions of Rs. 2 lahks under Section 24 and Rs. 1.5 lakh under Section 80C of the Income Tax Act, respectively.<\/span><\/p>\n<h3><strong><span data-preserver-spaces=\"true\">Conditions for Claiming Tax Benefit on Top-Up Home Loan:<\/span><\/strong><\/h3>\n<p style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">To verify that the <a href=\"https:\/\/homefirstindia.com\/product\/home-loans-top-up\/\"><strong>top-up loan<\/strong><\/a> was used for the acquisition, building, renovation, or repair of the house or residential property, you must have receipts and other necessary documentation. If the funds were used for renovation, repair, or alteration of the residential property, no deduction can be claimed on the main payments.<\/span><\/p>\n<h3><strong><span data-preserver-spaces=\"true\">Dos and Don&#8217;ts While Claiming the Deduction<\/span><\/strong><\/h3>\n<p style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">Even if you have missed the actual payment, you can claim a deduction for the interest portion of the payment. This is because <a href=\"https:\/\/homefirstindia.com\/article\/section-24-of-income-tax-act-check-deduction-for-home-owners\/\"><strong>section 24 of Income Tax Act<\/strong><\/a> refers to interest payments on housing loans as &#8220;paid or payable.&#8221; However, store the documents in a safe place in case tax officials require verification.<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">Second, only if the loan amount is utilized for repairs, renewals, alterations, or the purchase\/construction of a property will the deduction (either on interest payments\/principal repayment or both) be considered eligible. There will be no deduction if the top-up loan is used for anything else, such as children&#8217;s education or a family vacation.<\/span><\/p>\n<p style=\"text-align: justify;\"><span data-preserver-spaces=\"true\">Finally, records and documents must be kept to establish that the loan was taken to repair or renovate a residential property.<\/span><\/p>\n<p><strong>Share this article on <a href=\"https:\/\/api.whatsapp.com\/send?text=https:\/\/homefirstindia.com\/article\/tax-benefit-on-top-up-loan\/\">WhatsApp<\/a><\/strong><\/p>\n<p><strong>Also read:<\/strong><\/p>\n<h4><strong><a href=\"https:\/\/homefirstindia.com\/article\/top-up-loan\/\">Home Loan Top Up<\/a><\/strong><\/h4>\n<h4><strong><a href=\"https:\/\/homefirstindia.com\/article\/tax-benefits-on-second-home-loan\/\">Tax Benefits on Second Home Loan<\/a><\/strong><\/h4>\n<h4><strong><a href=\"https:\/\/homefirstindia.com\/article\/section-24-of-income-tax-act-check-deduction-for-home-owners\/\">Section 24 of Income Tax Act: Check Deduction for Home Owners<\/a><\/strong><\/h4>\n<h4><strong><a href=\"https:\/\/homefirstindia.com\/article\/how-stamp-duty-and-registration-charges-are-calculated-on-property\/\">How Stamp Duty and Registration Charges are Calculated on Property?<\/a><\/strong><\/h4>\n<h4><strong><a href=\"https:\/\/homefirstindia.com\/article\/encumbrance-certificate-why-it-is-important-for-home-loan\/\">Encumbrance Certificate: Why it is Important for Home Loan?<\/a><\/strong><\/h4>\n<h4><strong><a href=\"https:\/\/homefirstindia.com\/article\/home-loan-prepayment\/\">Home Loan Prepayment<\/a><\/strong><\/h4>\n","protected":false},"featured_media":0,"template":"","article_category":[73],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What are the Tax Benefits on Top-Up Loan? - HomeFirst<\/title>\n<meta name=\"description\" content=\"Tax benefits on Home Loan Top Up- The maximum deduction applicable if it was used for home renovation is \u20b930,000 on interest payment and none on principal\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What are the Tax Benefits on Top-Up Loan? - HomeFirst\" \/>\n<meta property=\"og:description\" content=\"Tax benefits on Home Loan Top Up- The maximum deduction applicable if it was used for home renovation is \u20b930,000 on interest payment and none on principal\" \/>\n<meta property=\"og:url\" content=\"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/\" \/>\n<meta property=\"og:site_name\" content=\"Blogs &amp; Articles\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/homefirstindia\/\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-14T10:12:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/homefirstindia.com\/app\/uploads\/2022\/06\/Tax-Benefit-on-Home-Loan-Top-Up.png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@homefirstindia\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/\",\"url\":\"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/\",\"name\":\"What are the Tax Benefits on Top-Up Loan? - HomeFirst\",\"isPartOf\":{\"@id\":\"https:\/\/homefirstindia.com\/blog\/#website\"},\"datePublished\":\"2022-06-21T07:54:14+00:00\",\"dateModified\":\"2025-02-14T10:12:57+00:00\",\"description\":\"Tax benefits on Home Loan Top Up- The maximum deduction applicable if it was used for home renovation is \u20b930,000 on interest payment and none on principal\",\"breadcrumb\":{\"@id\":\"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Articles\",\"item\":\"https:\/\/homefirstindia.com\/kn\/blog\/article\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Tax Benefit on Top Up Loan\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/homefirstindia.com\/blog\/#website\",\"url\":\"https:\/\/homefirstindia.com\/blog\/\",\"name\":\"HomeFirst: Blogs & Articles\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\/\/homefirstindia.com\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/homefirstindia.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/homefirstindia.com\/blog\/#organization\",\"name\":\"HomeFirst: Blogs & Articles\",\"url\":\"https:\/\/homefirstindia.com\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/homefirstindia.com\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/homefirstindia.com\/blog\/wp-content\/uploads\/2024\/07\/Home-first-logo.jpg\",\"contentUrl\":\"https:\/\/homefirstindia.com\/blog\/wp-content\/uploads\/2024\/07\/Home-first-logo.jpg\",\"width\":2388,\"height\":2388,\"caption\":\"HomeFirst: Blogs & Articles\"},\"image\":{\"@id\":\"https:\/\/homefirstindia.com\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/homefirstindia\/\",\"https:\/\/twitter.com\/homefirstindia\",\"https:\/\/www.instagram.com\/homefirstindia\/\",\"https:\/\/in.pinterest.com\/HomeFirstIndia\/\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What are the Tax Benefits on Top-Up Loan? - HomeFirst","description":"Tax benefits on Home Loan Top Up- The maximum deduction applicable if it was used for home renovation is \u20b930,000 on interest payment and none on principal","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/","og_locale":"en_US","og_type":"article","og_title":"What are the Tax Benefits on Top-Up Loan? - HomeFirst","og_description":"Tax benefits on Home Loan Top Up- The maximum deduction applicable if it was used for home renovation is \u20b930,000 on interest payment and none on principal","og_url":"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/","og_site_name":"Blogs &amp; Articles","article_publisher":"https:\/\/www.facebook.com\/homefirstindia\/","article_modified_time":"2025-02-14T10:12:57+00:00","og_image":[{"url":"https:\/\/homefirstindia.com\/app\/uploads\/2022\/06\/Tax-Benefit-on-Home-Loan-Top-Up.png"}],"twitter_card":"summary_large_image","twitter_site":"@homefirstindia","twitter_misc":{"Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/","url":"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/","name":"What are the Tax Benefits on Top-Up Loan? - HomeFirst","isPartOf":{"@id":"https:\/\/homefirstindia.com\/blog\/#website"},"datePublished":"2022-06-21T07:54:14+00:00","dateModified":"2025-02-14T10:12:57+00:00","description":"Tax benefits on Home Loan Top Up- The maximum deduction applicable if it was used for home renovation is \u20b930,000 on interest payment and none on principal","breadcrumb":{"@id":"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/homefirstindia.com\/blog\/article\/tax-benefit-on-top-up-loan\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Articles","item":"https:\/\/homefirstindia.com\/kn\/blog\/article\/"},{"@type":"ListItem","position":2,"name":"Tax Benefit on Top Up Loan"}]},{"@type":"WebSite","@id":"https:\/\/homefirstindia.com\/blog\/#website","url":"https:\/\/homefirstindia.com\/blog\/","name":"HomeFirst: Blogs & Articles","description":"","publisher":{"@id":"https:\/\/homefirstindia.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/homefirstindia.com\/blog\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/homefirstindia.com\/blog\/#organization","name":"HomeFirst: Blogs & Articles","url":"https:\/\/homefirstindia.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/homefirstindia.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/homefirstindia.com\/blog\/wp-content\/uploads\/2024\/07\/Home-first-logo.jpg","contentUrl":"https:\/\/homefirstindia.com\/blog\/wp-content\/uploads\/2024\/07\/Home-first-logo.jpg","width":2388,"height":2388,"caption":"HomeFirst: Blogs & Articles"},"image":{"@id":"https:\/\/homefirstindia.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/homefirstindia\/","https:\/\/twitter.com\/homefirstindia","https:\/\/www.instagram.com\/homefirstindia\/","https:\/\/in.pinterest.com\/HomeFirstIndia\/"]}]}},"_links":{"self":[{"href":"https:\/\/homefirstindia.com\/mr\/blog\/wp-json\/wp\/v2\/article\/3812"}],"collection":[{"href":"https:\/\/homefirstindia.com\/mr\/blog\/wp-json\/wp\/v2\/article"}],"about":[{"href":"https:\/\/homefirstindia.com\/mr\/blog\/wp-json\/wp\/v2\/types\/article"}],"wp:attachment":[{"href":"https:\/\/homefirstindia.com\/mr\/blog\/wp-json\/wp\/v2\/media?parent=3812"}],"wp:term":[{"taxonomy":"article_category","embeddable":true,"href":"https:\/\/homefirstindia.com\/mr\/blog\/wp-json\/wp\/v2\/article_category?post=3812"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}