Can I Claim HRA & Home Loan Tax Benefit in Same City?

Can I Claim HRA If I Own A HouseThere are lot of confusion when we talk about claiming HRA benefit and also get tax benefit on home loan interest. The biggest confusion is whether one can claim both house rent allowance and home loan interest benefit together and save maximum income tax? In this article I will consider a scenario as per my understanding, while watching a TV show related to income tax and found it interesting to share in this website.

Question Asked: Can I Claim HRA if I Own a House?

Mr. X is staying with his father’s house and claiming HRA benefit by paying rent to his father. Now he bought a new flat on the same city and will get the possession by next financial year. In that case can he claim both the benefit of home loan interest & HRA together?

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One Can’t Claim HRA and Home Loan Simultaneously in Same City

Well, I think this is a very common scenario as mostly we are growing and started making money by staying our parents house only. In that case, if you are not availing HRA benefit then you can easily pay rent to your parent and get HRA benefit under section 80GG if you are a business man /  freelancer / self-employed or section 10(13A) for all salaried employee where employer provided HRA exemption is available

Now gradually, when he/she is earning well and want to buy a new flat or property in his/her name then the HRA claim benefit and home loan interest benefit rules will change a little bit.

In case of Under-construction / Self-occupied House- Same City

Till the time property is getting ready, one can get home loan benefit up to 2 lakh as accumulated interest of pre-construction period under self-occupied property. This amount is calculated by adding the complete interest and then divided in 5 equal parts and accordingly every year you can avail home loan benefit up to 2 lakh. In that case, one can claim both HRA & home loan benefit together till the time of getting possession.

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But if your property is ready and still you want to stay with your parent house and claim HRA & home loan interest benefit together, then you have to justify why you can’t be able to live to your new property during tax scrutiny(if any) then there might be some consideration due to long distance, which I am not sure about. May a professional or CA can guide you better.

In case your property is in different city?

This is also a very common scenario these days as many people are working in different cities outside their home town and buy flat / property at home town when staying rented house in the different city. This scenario is very simple, as you can easily claim HRA for your rent paid and also get home loan interest rate deduction together. In case your property is let-out or rented out in home town, then there is  calculation to find out the net amount of your loss from home loan and income from rental income.

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If you have purchased multiple properties in different cities and not sure about how to get income tax exemption, then you should know this complexities of tax calculation and find out the proper way to handle such situations to stay away from unwanted penalties. It’s always better to consult a CA or CFP professionals who can easily guide you to understand various sections and how to save taxes much. In case your scenario is very simple like this, I think a simple understanding of these rules is enough to handle income taxes own. Share your thoughts and experiences about this topic here by writing a comment below. Thanks for sharing on Facebook.

Can I Claim HRA & Home Loan Tax Benefit in Same City?
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About the Author: Santanu

I am a passionate blogger and personal finance enthusiast. Mostly share about investment tips, insurance guide, banking how to guides and various personal finance hacks through my blog. Checkout my first YouTube Channel on Personal Finance Guide.

1 Comment

  1. Hi Santanu,
    Very Informative blog, could you clarify on the 80CCD (1b). If contribution to NPS through employer is 67000.00 and other investments completes 1.5 lakhs limit.
    1- How additional 50000 in NPS can give tax benefit?
    2- Does that 50000 has to be voluntary contribution?
    3- Is it possible to part 67000.00 as 50000 (under 80CCD (1B) + 17000 (under 80C).
    Thanks for your effort in this blog!!

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