Claim Home Loan Tax Benefits & HRA together for ITR filing

Hyderabad: As many of us are aware, there are a number of people who own more than two homes. Salaried persons have few alternatives for tax savings, therefore, the ability to combine HRA and house loan repayment tax deductions results in large tax savings. Salaried and self-employed people can save money while completing their ITRs […]

Hyderabad: As many of us are aware, there are a number of people who own more than two homes. Salaried persons have few alternatives for tax savings, therefore, the ability to combine HRA and house loan repayment tax deductions results in large tax savings. Salaried and self-employed people can save money while completing their ITRs in a number of circumstances.

This article will enlighten readers on how to jointly claim Home Loan tax benefits and HRA for tax purposes.

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Scenarios to Claim Home Loan Tax Benefits & HRA Jointly

 Here are different circumstances under which a taxpayer can claim both.

Owns a House in One City but Lives on Rent in Different City

Under this scenario, the taxpayer is eligible to claim all home loan privileges and the HRA exemption even if he owns a house in one city and is living on rent in a different city. However, to receive this benefit, you must get HRA (House Rent Allowance) as part of your income. According to Section 10(13A) of the Income-tax Act of 1961, an individual is exempted from HRA if the spending was used to pay rent for residential property that the person inhabits.

Furthermore, you must follow the rules for House Loan deductions. Interest on Home Loans may be claimed as a deductible for self-occupied residential property up to ₹2 Lakhs each fiscal year under Section 23(2) of the Income-tax Act read with Section 24(b).

Owns a House but Lives on Rent in Same City

If a taxpayer owns a house, but due to factors relating to his/her job, such as a longer commute to work, he/she rents a home in the same city nearby as your office, he/she is eligible to claim both benefits.  However, the taxpayer will have to demonstrate that he/she has legitimate grounds for doing so.

Additionally, a taxpayer may only claim these benefits if HRA is included in his/her salary. For the purpose of claiming HRA under Section 10(13A), the individual claiming the benefit must be a renter of the residing property and not the owner.

Someone Lets Out His/Her Owned House and Lives in the Same City on Rent

When a taxpayer rents out his own home and lives elsewhere in the same city on rent for reasonable causes such as nearness to the workplace, children’s school, or any other viable reason, the deduction under Section 80C for principal repayment of a Home Loan of up to ₹1.5 Lakhs is not available.

Apart from this, all additional interest-related deductions and the HRA exemption are available to the taxpayer.

House is Under Construction and Taxpayer is Living on Rent in Same City

The taxpayer has paid off a loan for his/her house, which is still under construction, and he/she lives in rental housing in the same city. In such a scenario, the taxpayer is entitled to the HRA exemption as well as any other deductions linked to the House Loan, with the exception of interest under section 24(b). The taxpayer can claim this deduction for interest paid after the house is built in regular increments over the next five years.

Conclusion

People always try to find ways that can help them to save taxes. Whether you are a self-employed individual or a salaried person, the tax deduction benefits offered by HRA and House Loan repayment are crucial for both individuals since they assist in saving a sizable amount of tax.

Government always brings out new rules and regulations in order to provide an opportunity for the citizens to save their hard-earned money. Therefore, as a taxpayer, you should always keep yourself updated and well-informed about these regulations.