Procedure to claim both HRA and home loan tax benefit

Generally, employees claim tax benefits on home loan repayment or HRA. But do you know that you can claim both these tax benefits? But, there are certain criteria to be eligible to claim tax benefit on HRA and home loan repayment together.

Here are the complete details:

The House Rent Allowance (HRA) component of the salary is meant for the rent expenditure paid by an employee. Employees are allowed to exempt HRA from taxable salary under Section 10(13A) of the Income Tax Act.  As per the section, an employee must actually incur the expenditure towards the payment of rent for residential accommodation. In addition to that, he/she must occupy the residential accommodation. If an employee fulfils the above-mentioned conditions, then he/she can claim income tax benefit on HRA.

Employees who own a house and live in their own house cannot claim the tax benefit on HRA. That means those employees who have self-occupied their own properties are not entitled to claim the tax benefit on HRA. The income tax department does not allow you to claim tax benefits on HRA if you own a house in the same city where you are working.

However, there are certain conditions where employees can claim the tax benefit on both the HRA and home loan repayment. If you reside in a rented house even though you own a house in the same city where you are working, you can claim HRA. But, your workplace should be far from your own house or your children’s school.

That means, if you own a house in a city where you work, but live in rented accommodation due to the distance between your workplace and your house or your children’s school and your house. In such a case, you can claim tax benefits on your HRA and home loan repayment.

However, if you have not self-occupied your property means, it is leased to someone else. That means you are earning rental income, which should be disclosed in your income tax returns. It is added to your taxable income.

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