You get tax benefit on top-up home loan

Apart from the home loan, I had taken a top-up loan last year. Will I get a tax deduction on it?

- AMIT MAHESHWARI

—Umesh Sehgal

Yes, you can claim tax benefits on your top-up home loan, but only if the funds are used for eligible housing purposes such as buying, constructing, or renovating a residential property. The interest paid on a top-up loan qualifies for deduction under Section 24(b) up to ₹2 lakh per year for a self-occupied property and without any upper limit for rented property. Principal repayment on the top-up loan can also be claimed under Section 80C, but only if the loan is used for purchase or construction of a house. If used only for repairs or renovation, principal repayment is not eligible for deduction.