Money Excel - Personal Finance Blog

Menu
MENUMENU
MENUMENU
  • Home
  • Business Ideas
    • 225 Small Business Ideas
    • 40 Online Business Ideas
    • 20 Business Ideas for Beginners
    • 20 small manufacturing business
    • 30 Food Business Ideas
    • 100 Business Ideas low investment
  • Stock Market
    • Best Demat & Trading Accounts 2021
    • Best Virtual Trading Apps
    • Best Stock Screener
    • Best Discount Brokers in India
    • Multibagger Stocks of LockDown
    • Rakesh Jhunjhunwala Portfolio
  • Mutual Funds
    • Best Mutual Funds 2021-22
    • Best Direct Mutual Fund Platform
    • Best Mutual Fund Mobile Apps
  • Incometax
    • Income Tax Calculator FY 2020-21
    • Latest Income Tax Slab FY 2021-22
    • Income Tax Refund Request
    • Pay Advance Tax Online
    • Download New 15G -15 H Forms
  • Investment
    • Best Investment Options 2021
    • Long Term Investment Options
    • Best Investment Regular Income
    • Best Investment Options NRI
  • Credit Card
    • Best Credit Cards 2021-22
    • Best credit card for online shopping
    • Best Forex Card in India
    • Best Business Credit Cards
    • Credit Cards against Fixed Deposit
  • Insurance
    • Best Term Insurance Plans 2021
    • Best Health Insurance 2021
    • Best LIC Policy 2021
    • Best Car Insurance Companies
    • Best Mobile Insurance Companies
  • Downloads
Home
Home Loan
Home loan HRA and your Taxes!

Home loan HRA and your Taxes!

Raviraj Parekh August 2, 2020

Home loan HRA

Suresh, currently employed with MNC Company in Mumbai, is staying in a rented apartment in Mumbai and has bought himself a property in Ahemedabad for which he has taken a home loan.

Now he is in confusion while filing tax returns – “Can I claim both HRA and home loan benefits?”

This seems to be a dilemma for most tax payers. When Suresh pays rent, under the Income tax act, he is definitely allowed to claim both HRA and home loan benefits (interest payment and principal repayment).

Do not miss below posts -
  • NRI Home Loan – Document and Checklist
  • ICICI Bank Cashback Home Loan – Should you opt?
  • Axis Bank Happy Ending Home Loan Review – Think Thrice

Similar to Suresh we have many queries about Home loan, HRA and Tax Benefits, Let us try to evaluate various possible situations an individual can find himself in and understand what the income tax act permits him to do.

Situation 1: You live in your own house purchased via Home loan

You have taken a home loan and residing in the house purchased with it. Since you are residing in your own house, you will not be able to claim HRA. However, you will be able to claim tax benefits on both, the principal and interest repaid on the home loan.

Situation 2: You own a house in another city

This situation was the one faced by Suresh. He resided in Mumbai but had bought an apartment in Ahmedabad taking a home loan. Suresh will be entitled to HRA exemption and tax benefits on both, the principal and interest repaid on the home loan.

Situation 3: Your house cannot be occupied at this point

You have bought a house in same city of your work by taking a home loan and you’re currently living in same city in a rented apartment because the house is under construction. In such a case, you are eligible to claim HRA.

In such case you can take partial tax benefit on the home loan, you can claim tax benefits only for your principal before the completion of your house.

Once your house is completed, you can claim tax benefits on the total interest paid up.

Situation 4: You have a house but you cannot reside in it

You have bought a house in Surat taking a home loan and now you aren’t residing in it but are living in a rented apartment in Surat itself for genuine reasons e.g. the house that you have bought is far away from your office.

In such cases, the Income tax act permits the individual to claim HRA and home loan benefits which includes both principal and interest repaid on the home loan.

Also, please note that if your house remains vacant, then you will still need to pay tax on a notional rent income.

Situation 5: You have rented your own house and currently residing in a rented house

You took a home loan and your house is now ready for occupation. You have rented the same out while you reside in a rented house. The Income tax act allows you to claim both HRA and home loan benefits.

However, in such a case, since you are the recipient of rent because you have let out your own house, that income is taxable at your hands.

The Income Tax Act treats HRA and home loan deductions under separate sections independently. The two are not interconnected to each other.

HRA is dealt with in section 10(13A) Rule 2A while home loans are entitled for tax benefits under section 80C (tax benefit on principal repayment) and Section 24 (tax benefit on interest payment) of the Income Tax Act. Hence, feel free to avail both tax benefits accordingly.

Tweet
Share
Whatsapp
Pinterest
Prev Article
Next Article
Tags:benefits claim home Home loan house hra income income tax loan tax tax benefits

About The Author

Raviraj Parekh

Raviraj is the man behind moneyexcel.com. He is PGDBA, engaged in blogging for 10 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. He is not affiliated with any financial product, service provider, agent or broker. The purpose of this blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

6 Comments

  1. Ravi Kiran

    Dear Sir,
    I have taken home loan and purchased a house in a city and working in another village which is 45 kms away. Can i avail both HRA and HOME LOAN benefits? Do i have to show the rent as other income for this? If so what is the amount? Thanking you.

    August 25, 2015
  2. Raviraj Parekh

    Dear Ravi Kiran,

    If you are doing up down you can not claim both benefit.If you are staying at work place in your case village you can claim both benefit.

    August 25, 2015
  3. Ravi Kiran

    Dear Ravi,
    The loan is a joint one, where as the house registered on my name only! Then how to get benefit for IT in view of HRA or Housing Loan for my wife? Thank you!

    August 28, 2015
  4. Raviraj Parekh

    Dear Ravikiran,

    If your wife is earning she can claim benefit of this home loan for income tax exemption.

    August 29, 2015
  5. Ravi Kiran

    Dear Ravi, I hav read in many sites that ownership is mandatory for claiming IT exemption for housing loan. In my case she is merely a co borrower. Even ASHAL of AIFW told the same. So that I am looking for alternatives. Could you please go through this?

    August 29, 2015
  6. Raviraj Parekh

    Yes Ownership is mandatory to claim Tax Benefit.Usually banks insist co-owners to be co-borrowers of the loan.I will try to find more information and revert.

    August 29, 2015

Leave a Reply Cancel Reply

Search

Top Posts & Pages

  • Income Tax Calculator FY 2020-21 (AY 2021-22) – Excel Download
  • Rakesh Jhunjhunwala Portfolio Holdings - March 2021
  • 20 small manufacturing business ideas with low cost
  • Download Income Tax Calculator FY 2021-22 (AY 2022-23)
  • Cash Deposit Machine Locator – How to find CDM Near You?
  • How to check Property Records and Land Records online in India?
  • 235 Small Business Ideas with Low Investment in 2021-22
  • LIC Premium Paid Certificate Download For Income Tax Purpose - Online
  • 30 Food Business Ideas with low investment
  • 10 Best Small Trading Business Ideas

Subscribe to Blog via Email

Join 5,474 other subscribers

Follow MoneyExcel

Money Excel – Personal Finance Blog

Personal Finance Blog
Copyright © 2021 Money Excel - Personal Finance Blog
| About |Downloads | Contact Us | Sitemap | Disclaimer | Privacy Policy |