Can I take home loan from a relative? Will I get any tax break in this case?
Deeptesh Chandra, Chandigarh
When it comes to house purchases, many a times the loan that your bank is offering you is not enough to make the purchase. To bridge the deficit you can take a loan from your relatives for your dream home and you will be eligible for tax deduction. To claim the deduction under Section 24 for interest repayment on loans, you could also borrow from relatives for reconstruction and repairs of property. For the purpose of taxation, it is not from where you borrow, but for what purpose determines whether you can claim the available tax benefit.
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To get this tax benefit, the interest charged on such a loan should be reasonable and a legal certificate of interest should be provided by the lender along with name, address and PAN. However, you will not be able to avail of any tax benefit for the principal repayment if you do not borrow from a scheduled bank or employer.
