How to Claim Interest on Home Loan deduction and HRA

In general, a taxpayer can claim deductions for HRA and home loan at the time of return filing. However, there are several situations in which an individual can claim interest on home loan deduction and HRA of his or her rented property.

 One of the major queries that an individual has about taxpaying is it allowed to claim tax deduction for both interest on a home loan and HRA. In certain situations, an individual is considered eligible for claiming both the deductions.

In order to claim HRA component, the individual must be staying on rent. Also, there are different sections for interest on home loan deduction and HRA under the IT Act. Under Section 10(13A), an individual can claim for the exemption of HRA. Deduction for the interest and home loan principal repayment can be claimed Section 24B and Section 80C, respectively.

Specific conditions under which an individual can claim both home loan interest and HRA benefits:

  • When the individual owns a house in a different city – In this situation, the owner of the house can claim both home loan interest deduction and HRA exemption.
  • When the house is being constructed – If an individual takes a home loan a purchases a property that is under construction, HRA can be claimed by him/her. After the property is fully constructed, the individual can claim for the tax benefits associated with the interest paid.
  • When an individual buys a house but cannot stay there – In case an individual buys a house but cannot stay in that house for being deputed in some other city, he/she can claim both type of deductions under the IT Act.
  • If a person staying on rent, lets out his house – In case an individual purchases a house, but instead of staying in it, he/she rents it out and decides to stay on rent as well, then he/she can avail both HRA exemption and interest on home loan deduction. However, the individual will not be able to claim the tax benefit under Section 80C for the principal amount repayment.

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