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T. Banusekar

I OWN a house in Kolkata. This house was purchased several years ago. I now want to renovate the house and also change the tiles, marbles, and so on.

For this, my father had agreed to give me a loan. I will have to pay interest at 9 per cent per annum to my father on the said loan.

Will I get tax benefits in respect of the loan?

Pavan

Reply

You will get the benefit of deduction in respect of interest under Section 24 on the said loan.

You, however, cannot get the benefit of rebate under Section 88 in respect of the principal repayment of the loan.

Section 24 allows a deduction in respect of interest on capital borrowed for purchase, construction, repairs, renewals or re-construction of a house property.

There is no condition in this section that the loan should be taken from the specified institutions, and so on.

However, the rebate under Section 88 in respect of the principal repayment can be claimed only where the loan is taken from the employer or from certain specified institutions.

It may be noted that the deduction under Section 24 will be restricted to Rs 30,000 if the property is self-occupied and can be claimed without any limit if the property is let out.

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