ITR filing: You can claim both home loan tax benefit and HRA together; details here
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Most of us are under the impression that we can either claim income tax deduction on HRA or on home loan repayment. However, the income tax law has provision that allows claiming of both these deductions together. If you are eligible to claim tax deduction on HRA or on home loan repayment simultaneously then you must do so as what’s the harm in getting some tax benefits on your hard-earned money.
For a salaried person, who has very limited tax saving avenues, the tax deduction benefits available through HRA and home loan repayment become critical as it helps in saving a significant amount of tax. If you are eligible to claim these deductions simultaneously but if you are not utilising it fully, then you are losing your hard-earned money which you could have easily saved.
Here are three ways you can claim HRA and home loan tax deductions together.
Owned house in one city but living on rent in a different city
An increasing number of people now own houses in one city but live on rent in a different city. Can such a person claim income tax benefit for both HRA and home loan repayment? The answer is yes. If you are living on rent in your city of job and own house in another city then income tax benefit can be claimed on HRA as well as Home loan interest.
This is the simplest way of claiming both HRA and home loan deductions together. First you must comply with the conditions related to HRA for which you must be an employed person and get HRA as part of salary.
Owning a house but living on rent in same city
Cities have become bigger, and for many it may take several hours for a one-way commute to the workplace. Many people prefer to move their accommodation closer to their workplace to reduce their commuting hours. So can you claim both deductions while living in the same city.
In special circumstances, if an assessee can prove that the owned property is quite far from the place of work, and hence the rented accommodation has been availed, then HRA tax exemption and home loan benefits both can be availed, a tax expert said.
If one lets out his owned house and lives in the same city on rent
Except for proximity to workplace, there could be many other compelling reasons for a person not to live in his owned house but in a rented accommodation. These reasons can be like the owned house is too small for the family or children’s school is near the rented accommodation.
If you have genuine reasons, there is no bar on claiming both deductions together.