InvestorQ : Can an individual claim HRA as well as home loan benefits?
Ashoka Patkar made post

Can an individual claim HRA as well as home loan benefits?

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Priyanka Singh answered.
3 years ago
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Whether you own a house or have taken one on rent, Indian income tax laws allow you to claim various benefits. You can avail of tax benefit on house rent allowance (HRA) only if you receive HRA from your employer. It is not a benefit that a self-employed person can claim.
To avail of this benefit, you should have incurred the expenditure on rent, with respect to a residential house property where you reside. Do note, the benefit of HRA is not available on the rent paid for a residential house that is occupied by any other person, irrespective of whether he/she is dependent on you assessee or not. It is also not available, in cases where the accommodation is either partly or fully owned by you.
The benefit of HRA, that according to the income tax rules, an employee can claim shall be restricted to the lowest of the following three amounts:
- the HRA actually received
- the excess rent paid over 10% of basic salary
- 50% of basic salary in case an employee is in any of the four metro cities, or 40%, in case he/she resides in any other place.
Nowhere does the law mention that HRA benefit cannot be claimed if you (the tax payer) already own a house and claim tax benefits with respect to a housing loan.
So, what are the conditions for claiming tax benefits on home loans?
The most important prerequisite for the allowance of deduction on the principal and interest components of a home loan, under Section 80 C and Section 24(b), is that you should be the owner/co-owner of the house.
Interest benefits are available on residential and commercial properties and on money borrowed from banks or from anyone else. Moreover, the interest on money borrowed for a let-out property is fully deductible. For a self-occupied house property, the benefit on interest is restricted to Rs. 2 lakh per year.
Claiming HRA as well as home loan benefits
Indian income tax laws allow you to have more than one house property. However, you have to opt for only one such property as self-occupied and offer notional rent on the other house for tax purpose.
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