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About Commercial Loans
Commercial loans are used to purchase or mortgage commercial properties such as shops, offices, warehouses, and industrial units. Key differences from residential home loans:
- Interest rates are typically 1–2% higher than home loan rates
- Maximum LTV ratio is usually 60–70%
- Tenures are shorter — typically 10–15 years
- GST of 18% applies on commercial property purchase from a builder
Commercial loan EMIs can be set off against rental income for taxation purposes under income from house property.
Frequently Asked Questions
What is the difference between commercial loan and home loan?
Home loans are for residential properties at lower rates (8–10%) with longer tenures (up to 30 years). Commercial loans carry higher rates (10–14%) with shorter tenures (10–15 years) and lower LTV ratios.
Can I claim tax deduction on commercial property loan?
Yes. Interest on a loan for a commercial property that generates rental income can be deducted from that rental income. There is no cap on the deduction unlike residential property.