In a case where you use your personal loan to buy or construct a house property, you can claim a deduction for interest paid on the loan. “An interest deduction up to Rs 2 lakh a year is available in the case of purchase or construction of a house. In case the house is let out on rent, the entire interest paid can be claimed as a deduction, however, a maximum of Rs 2 lakh can be set off in the same financial year against any other income,” Gupta said. You can carry forward the balance loss if any for the next eight years. In the case of personal loan used for repairs or reconstruction of a house, you can claim an interest deduction up to Rs 30,000 a year.