Personal Loan for house renovation

Hi Navneet,

You won't be able to claim deduction u/s 80C on the repayment of personal loan taken by you from the bank even if you've utilized it to construct your house. Section 80C deduction in respect of repayment of principal of housing loan can be claimed only if the loan is raised from specified entities listed in there. Not only are you supposed to have obtained the loan from a specified source, but the end-use also should have been restricted. A personal loan by its very nature doesn't have any end-use restriction. So you can't knock off the principal component comprised in the EMIs discharged during the year from your Gross Total Income u/s 80C. You are not entitled to claim Section 80C on another count—-you've renovated your house and haven't "constructed" it. However, Section 24(b), relating to interest on money borrowed to construct, renovate or repair a house, doesn't bar the assessee to raise loan from any source of his choice—you can borrow money from your Mummy, Daddy or Girlfriend, whoever lends you more easily. The rate of interest has to be reasonable, comparable to say what the SBI would charge. Also make sure you don't repay the loan, especially if it's from a relative or an acquaintance, otherwise than through an account payee cheque or a DD. You'd need to obtain a certificate from the lender for the interest paid/payable during the financial year. Thanks,CA Sanjeev Bedi--- In ICAI_CIRC_MEERUT_ CA@yahoogroups. com, "navneetkumargupta_ ca" wrote:>> Dear friends> > Please help in one of the query. I have taken a personal loan and > utilised the funds in the renovation of the house. Can i take claim the > interest as expenses in house property income. What are the documentary > proof required for the same for the return.> > Navneet Gupta