Even with meticulous planning, you can exceed your budget while purchasing a house. However, most financial institutions offer benefits on a top-up loan
on home loans that can help you to cover the additional expenses incurred in due course of time.
The top-up on home loan does not have any end-use restriction and can be utilised for any of the following purposes-
Renovation and home expansion.
Furnishing your house.
Upgrading or replacing home appliances.
Repair work and other structural changes.
You can also use this top up to finance other expenses like your child’s education, travel costs, purchasing assets like cars, medical emergencies, etc.
However, to avail the income tax benefits on this home loan amount, you need to provide evidence supporting that you have used the advance to construct, acquire, expand, renovate or repair any residential property.
What are the tax exemptions you can enjoy on the top up home loan amount?
You can enjoy tax benefits on the top-up amount under Section 24(b) of the Income Tax Act, 1961. Under this section, you can avail an exemption on the interest payable up to Rs. 30,000. This deduction is available for self-occupied houses. For rented-out properties, there is no upper limit.
Note that Section 24(b) provide income tax benefits to the tune of Rs. 2 Lakh on the home loan interest paid.
Thus, the top-up loan is an exceptional beneficial option when it comes to acquiring additional funds to cover various expenses.