I am planning to purchase a new house. However, I do not wish to take a fresh home loan for this purchase. Instead, I intend to take a top-up loan on my existing home loan and use the top-up amount as payment for the new house. plz note that Throughout this period, I will continue servicing my original home loan as well
I have two queries in this regard:
- Will I be eligible for tax benefits on both the interest and principal repayment of this top-up loan, given that the funds will be used to purchase a new residential property?
- Since the top-up loan approval process is taking some time, I am considering taking a loan against my PF (Provident Fund) in the interim to complete the purchase transaction. Once my top-up loan is approved, I plan to use those funds to settle the PF loan, and thereafter start claiming tax benefits on the principal and interest repayment of the top-up loan. .
Could you please confirm whether this approach is compliant and whether the tax benefits I am expecting would apply in this scenario?
Looking forward to your guidance.
CAclubindia
