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A home is one of the essential factors of livelihood that offers safety and security to your family and is the most cherished possession. People spend their life savings to make their dream home. With time, the need for some improvements and modifications in your home might arise. With the present level of inflation, home renovation can be a big-ticket expense. Using your savings for such a huge expense can drain your savings in one go. While a personal loan seems to be an obvious choice, you would be amazed to know that there is a specific type of loan known as the home renovation loan that comes to your rescue in this case.


Before you proceed with the further steps, it's important to know what expenses are covered under home renovation loans from the income tax point of view. As per the Income Tax Department, home renovation loans majorly include home reconstruction works like the addition of a balcony, wall extension, addition of rooms to the existing floor, addition of floor, painting works, flooring & tiling work in the kitchen or bathroom, plumbing works, etc.


Furthermore, it's noteworthy that the purchase of any item falling in the consumer durables category is not included in this ambient of home improvement loans. For example, purchasing a new AC or television for the living room/bedroom does not fall under the definition of a home renovation, and you cannot claim tax rebate on home improvement loan against these expenses.

Tax Benefits on Home Improvement Loan

All the money that an individual pays against the home improvement loans comes under the ambit of home improvement loan tax exemption. However, a home improvement loan tax deduction is also applicable if the homeowner pays the amount directly. Let's dive in and know in detail about home improvement loan tax deduction:

  • Home improvement loan tax deduction: The home improvement loan tax deduction is applicable when the person uses the loan amount to carry out improvement work on his home. This also includes the loan taken for repair work and renovation works like painting & plumbing works.


As per Section 24 of the Income Tax Act, 1961, home improvement loan tax exemption is applicable on the interest paid against the home improvement loan. However, this tax rebate on home improvement loans has a maximum limit of Rs 30,000 per annum. This home improvement loan tax relief shares the overall tax benefit of Rs. 2,00,000 available every year under the said section for the interest amount paid against the home loans.


Hence, if you also have an ongoing housing loan and are availing of income tax benefit on the home loan interest, then the combined limit for the tax deduction against both interest paid on the housing loans and home improvement loan is Rs 2,00,000. For example, if you are availing of an interest benefit of Rs. 1,70,000 on the home loan amount, then the maximum tax rebate on the home improvement loan would be Rs. 30,000.

  • No exemption on the principal amount under home improvement loan tax exemption: It's important to note that Under section 80 C of the IT Act, which gives options for a tax deduction in case of housing loan; you cannot claim tax benefits against the principal amount of the house improvement loan.

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How to Apply for Home Renovation Loan?

You can follow the given steps to apply for a home improvement or home renovation loan:

  • Step 1: First of all, you need to estimate the amount you would require for your home's repair or renovation works.

  • Step 2: You need to prepare a plan and submit all the related details to the bank.

  • Step 3: Banks generally provide a loan of around 85%-90% of the amount you highlighted in your renovation plan.

  • Step 4: The 'technical department' of the lender/bank then approves the loan amount. This approval is generally based on your loan repayment capacity and previous credit records. Once the loan is sanctioned, the amount is then disbursed to your loan account.

  • Step 5: Sometimes your submitted quotation may not be rejected, but some listed costs may not be included in your home renovation loan amount. To avoid such circumstances, you should ensure that all terms and conditions of the lender regarding the home improvement loans are carefully followed.


If you are planning to renovate your home, you can apply for the home renovation loan through Bajaj Markets and benefit from the features like instant approval, simple documentation, and flexible repayment tenure. Don't miss the chance; check the eligibility criteria and the documents required to apply for the home improvement loan today itself.


If you are thinking of renovating or beautifying your home but lack the required budget or are contemplating if you pay for the expenses directly from your pocket, it would have a significant impact on your savings. Therefore applying for a home renovation or improvement loan would ease your financial requirement in such a situation. Since you get the required funds to renovate your home and the home improvement loan tax deduction makes it easy to settle the loan. You can apply for a home renovation loan through Bajaj Markets. 

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