Income Tax: Can You Claim HRA and Home Loan Tax Benefits Together? Here’s What Experts Say
For many salaried individuals, House Rent Allowance (HRA) is a crucial component of their salary package. Claiming an HRA exemption can significantly reduce taxable income. However, several people who have purchased a house with a home loan still live in a rented property—often due to work requirements in metro cities. This raises a common question: Is it possible to claim both HRA exemption and home loan tax benefits in the same financial year?
Tax expert Balwant Jain explains that under certain conditions, you can claim both benefits simultaneously, but only under the old income tax regime.
HRA Exemption – The Basic Rule
Under Section 10(13A) of the Income Tax Act, HRA exemption can be claimed if you:
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Live in a rented house
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Pay actual rent
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Do not own the house you live in
If these conditions are met, salaried employees can reduce their taxable income by claiming an HRA exemption, thereby lowering their tax liability.
Home Loan Tax Benefits
If you purchase a house with a home loan and receive possession during the financial year, you can claim tax benefits under two key sections:
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Section 80C – Deduction on principal repayment (up to ₹1.5 lakh per year)
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Section 24(b) – Deduction on interest paid (up to ₹2 lakh for a self-occupied property)
According to Jain, if you receive possession in a given year (for example, FY 2024–25), you can claim these benefits for the entire financial year, even if the property is self-occupied for only part of that year.
Owning a Home While Living on Rent
It is common in big cities for individuals to buy a house in one location but live in another on rent—either due to proximity to the workplace or better living arrangements. In such cases, you can claim:
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HRA exemption for rent paid on your rented home
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Home loan deductions for your purchased property (if not rented out)
The Income Tax rules allow you to classify up to two properties as self-occupied for tax purposes.
What If the House Is Rented Out Later?
If you rent out your purchased property later, you can still claim vacancy allowance for periods when it remained unoccupied. However, once the property is let out, its tax treatment will change from self-occupied to let-out property rules.
Timing Matters for Salary Deductions
If possession of your home is received late in the year (for example, in March), your employer may not have adjusted your TDS (Tax Deducted at Source) to include home loan benefits. In that case, you can still claim both HRA exemption and home loan benefits while filing your Income Tax Return (ITR).
Key Takeaways
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Yes, you can claim both HRA exemption and home loan tax benefits together—only under the old tax regime.
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HRA can only be claimed if you are paying rent for a house you do not own.
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Home loan benefits are available under Sections 80C and 24(b) once you receive possession.
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You can treat a maximum of two properties as self-occupied for tax purposes.
Final Word:
If you are living in a rented property and also paying EMIs for your own home, don’t miss out on these dual benefits. With proper documentation and compliance, you can significantly reduce your tax outgo under the old regime.
