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So, as discussed, whether the property is fully owned or partly owned by you, you will not be able to claim the tax benefits if you pay rent for such property. In order to claim an income tax deduction on both HRA and home loan repayment, there should be a justified reason for not staying in the own house and staying in a rented one. It may be noted that in cases, where you have rented out the house on which you have taken a home loan, and you live in another house on rent, you need to disclose the rental income that you earn from the let-out property.
Income Tax Deduction on HRA and Home Loan
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The formulas will be used to calculate HRA, and the least of the three amounts will be eligible. No, you cannot claim the HRA for a rented house, if you also have your own house in the same city . If you are making payments towards rent for residential accommodation but you do not get HRA from your employer then you can still claim the deduction under Section 80GG of the Income Tax Act.
Can HRA Be Claimed Together With Interest Rate on Home Loan?
As regards payment of rent for accommodations fully owned by you, you must be wondering how can it be possible. Yes, this is possible in case you have leased out your property to your employer and the same property is let out to you by your employer. This is done to save taxes as the employee can avail tax benefit in respect of let out property in the form of 30% standard deduction against the rent received as well as interest paid for money borrowed for such property. Likewise, in cases of jointly-owned residential houses, you cannot pay rent to the other co-owner and claim the benefit of HRA.
Here are three ways you can claim HRA and home loan tax deductions together. Yes, you can claim income tax exemption on both house rent allowance and repayment of home loan. If you are living in a house on rent and servicing a home loan on another property – even if both the properties are located in the same city – you can claim tax benefit for both. If you live in rented accommodation and get HRA from your employer it is a customary tax-saving exercise to claim tax exemption on the same. Others who buy a house on a home loan get tax deduction against home loan interest and principal repayment.
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The exempted amount is determined based on section 10 of the Income Tax Act. This tax benefit is available to professionals only for the period when they rent a house. 1) However, if you have a home loan running but the home is still UNDER CONSTRUCTION, and during that period if you are staying in a rented house?
This deduction of interest is available for every housing loan taken for purchase, construction, renovation or reconstruction of a residential house. The amount of tax deduction depends upon the purpose for which the house has been occupied – i.e. whether the house is occupied for one's personal use or for renting out to others. Yes, but it is not possible with a self-occupied house as this can happen only when you give your property on rent. “If a person lets out his own property and lives in the same city or any other city for any reason including proximity to the children’s school or job location etc., the person shall be eligible to claim benefits of HRA as well as Home loan repayment,” says Surana.
When to claim tax benefit on home loan and HRA both
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In other words, it is vacant due to individual’s employment at another place," explains Iyer. If a person applies for a home loan online to own a house but somehow chooses to lease it, and he/she decides to reside in a rented house, such a person can also claim HRA deduction together with home loan interest rate. However, as per Section 80C, such an individual cannot claim benefits on principal repayment. There could be a number of reasons as to why a person may not be able to reside in the house they own, with the most common being distance from the workplace.
An increasing number of people now own houses in one city but live on rent in a different city. Can such a person claim income tax benefit for both HRA and home loan repayment? "Yes, if you are living on rent in your city of job and own house in another city then income tax benefit can be claimed on HRA as well as Home loan interest," says Sudhir Kaushik, Co-Founder & CEO, TaxSpanner.Com. While the owned property can either be self-occupied or let out, the tax benefits differ. In case of self-occupied property, you can claim deduction both on principal repayment up to Rs 1.5 lakh under section 80C and tax deduction benefit on interest payment under section 24b. There could be situation that you are paying home loan on under construction house and staying in rented house.
Some NBFCs allow customers to either entirely pay the loan amount or part pre-pay the principal on the loan. There are usually some terms and conditions attached to such pre-payment. For example, pre-payment is only allowed after 12 months and pre- payment fee might be charged on the amount being repaid.
You are therefore advised to obtain your own applicable legal, accounting, tax or other professional advice or facilities before taking or considering an investment or financial decision. You agree to receive e-mails/SMS/phone calls and such other mode as permitted under law from the Facilities Provider or ABC Companies or its third-party service providers regarding the facilities updates, information/promotional offer and/or new product announcements and such other related information. HRA benefit is available only to a salaried person if certain conditions are satisfied. The second condition to be satisfied is that you should be paying rent for the accommodation occupied by you, and the third condition to be fulfilled is that the rent being paid should not be for the accommodation owned by you. If you are living in a rented accommodation in the city where you work, there should not be any problem in claiming HRA deduction if it is part of your salary.
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Personal loan in Kadappa – Check Eligibility and Apply Online
HRA is a special allowance paid as a part of one’s salary by his employer to meet the rental expenses of accommodation in that city. A general confusion among the salaried class is whether they will have to forego the exemption benefit of House Rent Allowance received from their employer in order to claim a deduction of interest on the home loan serviced by them? You may claim both HRA exemption and interest deduction on a home loan provided certain requirements as per the Income Tax Act, 1961 (‘the Act’) are met. This article aims to offer a detailed explainer regarding all possible scenarios and the amount one can claim for both HRA exemption and interest deduction on a home loan. You can deduct up to Rs 2 lakh in interest payments on a home loan in a financial year under Section 24, and you can deduct up to Rs 1.50 lakh in principal repayments under Section 80C.
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