Salaried individuals are often found asking, “Can HRA and home loan be claimed together?” The answer to this age-old query is “Yes” you can, in certain situations. HRA is claimed under section 10(13A), whereas principal repayment and interest paid on the home loan can be claimed under 80C and 24 (b), respectively. Since both provisions of HRA and home loan deductions do not fall under the same section of the Income Tax Act, you can claim both subject to fulfilment of certain criteria.

Conditions in which home-owning individuals can claim both HRA and benefits against house loans:

  1. House owner residing in a different city:

    This is pretty straightforward and should not result in any problems. You may own a house in one city and live in a rented home in another city. In such an instance, both HRA and home loan principal & interest paid can be claimed.
  2. House owner does not have possession:

    If you have purchased a house that is still under construction or if you have not received possession of the house, you are not considered the owner of that house. In such a case, you can still claim HRA benefits, but cannot claim the home loan benefits. Once you get the possession of the house, the interest benefits till date can be claimed. The interest paid benefit is, however, restricted to two lakhs per annum.
  3. When a homeowner rents an apartment in the same city:

    There could be many reasons for you to not move into a house you have bought and rent an apartment. Both HRA deductions and home loan benefits can be claimed only if you rent a house because the distance between your owned-residence and place of work is at least 35 Kilometres.
As both home loan interest tax exemption and HRA fall under different sections, you are allowed to claim both HRA and home loan benefits. The income tax department has made provisions to ensure citizens owning a house but if you are staying in a rented flat then do not miss out on tax benefits.

However, it is worth noting that HRA benefits cannot be claimed if
  1. You are the joint owner of the property, and you are paying rent to other owners
  2. The employer owns the property and rents out to the property to the employee to recover rent on the same.
Learn more about your home loan eligibility here.

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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