4/25/24, 5:26 PM Can you claim both HRA and deduction on home loan interest?

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HOME INCOME TAX SALARY INCOME CAN YOU CLAIM BOTH H…

Can You Claim Both HRA & Deduction on Home

Loan Interest?
Updated on: Apr 1st, 2024 | 6 min read

Yes, you can claim both HRA (House Rent Allowance) and deduction on home loan interest in

India under certain conditions. This can be beneficial for taxpayers who are paying rent and

also have a home loan.

Conditions for claiming both HRA and home loan interest deduction:

You must be a salaried individual receiving HRA as part of your salary.

You must be residing in a rented accommodation in the same city where you work.

You must have availed a home loan for a property in your own name or jointly with your

spouse.

Homeowners, who are paying back their home loan and getting HRA as part of their
salary, can avail both the house property-related tax benefits to lower their taxable
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income. There can be cases where you work in one city and live on rent, your family

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4/25/24, 5:26 PM Can you claim both HRA and deduction on home loan interest?

resides in another city, and you buy a home where your family is. A homeowner can
claim:

HRA exemption towards rent payment

Deduction on home loan interest as per Section 24

Principal Repayment under Section 80C

Deduction for interest on home loan under Section 80EE or Section 80EEA

Note: Taxpayers paying taxes under the Old Tax Regime are eligible to claim the above

exemptions/ deductions.

Read more about home loan-related tax benefits on our guide

Here’s an example: Aryan lives in Gurgaon and pays a rent of Rs 10,000 per month;
he gets an HRA of Rs 15,000. His basic salary is Rs 40,000. Aryan has taken a loan to
buy a house in Bangalore where his parents currently live. The interest he pays on the
loan for his house is Rs 20,000 per month.

Aryan can claim HRA as follows – The amount of tax exemption from HRA will be a
minimum of these three:

HRA received = Rs. 15,000

40% of Basic since he lives in Gurgaon = Rs. 16,000

Rent paid – 10% of Basic = Rs.10,000 – Rs. 4,000 = Rs. 6,000

Therefore HRA exempt = Rs.6,000. Remaining HRA of Rs 15,000 – Rs 6,000 = Rs.9,000

will form part of his taxable income under Salaries on account of HRA.

Use the HRA calculator to determine HRA exempt from tax

The income from house property and claiming interest on home loan deduction will
be allowed as follows:

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4/25/24, 5:26 PM Can you claim both HRA and deduction on home loan interest?

Gross Annual Value of the property is Nil(because his parents live in the house
property)
Less: Deduction on Interest on home loan = Rs 2,00,000 (limited to Rs.2,00,000 for
self-occupied house)
Net Loss under the head ‘Income from House Property’ = (-) Rs 2,00,000 which will be
added to his taxable income.

Learn more about loss on house property due to home loan.

Certain cases where you cannot claim HRA exemption or deduction on Home loan interest

Scenario Eligibility

You have availed a home loan for which you You may avail of the benefit of the

are paying interest & reside in the same house, deduction for the interest paid on the loan,

and you are also earning HRA as part of your but you cannot claim exemption for HRA as

salary income you have not incurred expenditure towards

rent.

You have a self-owned house property & you You cannot claim HRA exemption unless

reside in a rented accommodation in the same the reason is your employment being far

city from the place of your house property or

any such genuine reason.

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4/25/24, 5:26 PM Can you claim both HRA and deduction on home loan interest?

When the construction of the house for which You can claim a deduction up to Rs. 30,000

you have availed a home loan is not completed for interest paid on a home loan

within 5 years from the end of the financial year

in which the loan was borrowed

Frequently Asked Questions

I have my house property in Chennai which is let out and I live in a

different house in Chennai and pay rent for that. Can I Claim HRA
exemption ?

No, you cannot claim an HRA exemption if you are living in a different house in the same city

and own a house in the same city. Still, you can claim the benefit, only if you can substantiate

with a valid reason for your stay, one of the reasons could be that the place of work is far

from the house you own, it is necessary to stay in a rented house to ease the commutation.

Can you claim both the HRA tax benefit and Home Loan tax
deductions if you are staying in a house bought on loan and you work
in the same city?

You can claim HRA if you receive it as a part of your compensation. However, you
need to reside in a rented accommodation to claim HRA. As you are staying at the
house, you have availed on a home loan, and you work in the same city, you
cannot claim HRA tax benefit. However, you can claim the income tax deduction
on the home loan for principal and interest payments as you have taken ownership
of the property.

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4/25/24, 5:26 PM Can you claim both HRA and deduction on home loan interest?

You have a house in the same city, but that house is being resided by
your husband’s parents. You are residing at another house on rent.
Can you get the HRA tax benefit and home loan tax deductions?

You are a salaried employee who receives HRA as part of your compensation, and
you reside at a rented accommodation in the same city where you work. Moreover,
you have availed of a home loan to buy a ready to move house in the same city,
and your in-laws reside in this house. You can claim both the HRA tax benefit and
home loan tax deductions.

Can you claim HRA tax exemption and deduction on home loan
interest as well?

Yes, you can claim HRA tax exemption and home loan tax deduction as well if you
meet certain conditions.

Can you claim HRA tax exemption and

Condition
Home Loan Tax Deduction

You have availed a house on loan

and you reside at a rented Yes
accommodation in another city

You have availed a house on loan Yes

and you reside in the same city in a

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rented accommodation due to work Provided the condition is genuine.

or children’s schooling

Yes

You have availed a home loan to You can claim only the home loan
buy an under construction interest deduction in case of under-
apartment/house and you live on construction property over five years in
rent elsewhere equal instalments starting from the year
the construction is completed.

Yes
You will have to show rental receipts from
You rent the house you have availed
your own house to calculate income tax
with a home loan and you live in a
liability.
rented accommodation elsewhere

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