{"id":8142,"date":"2021-07-05T01:08:00","date_gmt":"2021-07-04T19:38:00","guid":{"rendered":"http:\/\/www.apnaplan.com\/?p=8142"},"modified":"2021-07-05T01:24:03","modified_gmt":"2021-07-04T19:54:03","slug":"tax-benefit-both-hra-home-loan","status":"publish","type":"post","link":"https:\/\/www.apnaplan.com\/tax-benefit-both-hra-home-loan\/","title":{"rendered":"Can we claim HRA and home loan together for Tax Benefit?"},"content":{"rendered":"\n
Can we claim HRA and home loan simultaneously for Tax Benefit?<\/strong> \u2013 A question which is often asked by many tax payers. This is mainly because many employers do not allow both tax benefits together in certain situations. Unfortunately this is NOT the right thing to do.<\/p>\n\n\n\n Both HRA and Home Loan Interest tax sections are unrelated. You claim tax benefit on HRA (House Rent Allowance) under section 10(13A) while the tax benefit on payment of interest on home loan comes under section 24(b)<\/strong>. However there can be issues if both the sections are used together with the intent of tax evasion.<\/p>\n\n\n\n HRA is part of your salary structure and is paid mainly to provide for accommodation in the place of employment. A salaried person can claim HRA if both these conditions are satisfied:<\/p>\n\n\n\n The maximum HRA that can be claimed for tax exemption is minimum of<\/strong><\/p>\n\n\n\n The HRA calculation has been explained by an example:<\/strong><\/p>\n\n\n\n Assumptions<\/p>\n\n\n\n HRA Exemption Calculation:<\/strong><\/p>\n\n\n\n Rs 9,000 being the least of the three amounts will be the exemption from HRA. The balance HRA of Rs 6,000 (15,000-Rs 9,000) is taxable.<\/p>\n\n\n\n Are you worried that you are paying too much in income tax? Are you aware of all the changes in the tax laws? Where should you invest to save taxes? Do you know all tax sections that you can use to save your tax. Download a concise 43 page presentation free to answer all the above questions and save your taxes – legally.<\/a><\/p><\/div><\/div>\n\n\n\n There are 2 types of tax benefits you can claim on home loan:<\/p>\n\n\n\n Total deduction on interest on housing loan would be Rs 3.5 lakh (2 lakh u\/s 24 & 1.5 lakh u\/s 80EEA) for affordable house.<\/p>\n\n\n\n An important condition for claiming any home loan benefit is that your house should be ready to move. In case the house is still under construction, You can divide the home loan interest paid in under-construction period in 5 equal parts and claim it each year from the year house is ready.<\/p>\n\n\n\n We can now discuss situations when we would like to take tax advantage on HRA and Home Loan together. We can have following four situations:<\/strong><\/p>\n\n\n\n We cover each situation one by one.<\/p>\n\n\n\n This is a very easy situation to handle. You can easily claim tax benefit on both and NO employer has issue with this arrangement.<\/p>\n\n\n\n Salary components and salary structure plays a very important role in how much income tax you pay. We have come up with some optimised salary structure using which you pay NO income tax even with CTC of more than Rs 20 Lakhs<\/a>.<\/p><\/div><\/div>\n\n\n\n This is tricky situation. The first logical question which comes to mind is why would any person owning house in the same city stay on rent? Most employers have issue with this arrangement and may not give tax benefit on both HRA & Home Loan.<\/p>\n\n\n\n But legally you can claim tax benefit on both if you can give a valid reason for this arrangement.<\/strong> The reasons can be its more convenient to stay. For e.g. your flat is on the outskirts with almost negligible public transport, you might not want to live there and rather stay close to your place of employment. The other reason could be the owned house is smaller for the size of family. There are misconceptions that there should be minimum distance between two houses. All this is myth! All you need a genuine reason to stay on rent.<\/strong><\/p>\n\n\n\n Also if you move to your new owned house in the middle of financial year, it’s a genuine thing to do and you can claim HRA for the period you stayed on rent and house loan benefit for the entire year. <\/strong>In case your employer is not ready to give tax benefit on both – you can claim HRA tax benefit from employer and claim tax benefit on Home Loan while filing your Income Tax return. <\/a><\/p>\n\n\n\n The other question is should the owned house be assumed to have notional rent? The answer is No. If you receive actual rent then show, only then you need to pay tax on that.<\/p>\n\n\n\n There could be situation that you are paying home loan on under construction house and staying in rented house. In this case you can easily claim HRA. However for interest on home loan to be eligible for tax benefit, your house should be ready. Hence for under construction house you cannot claim tax benefit on home loan right now. You can divide the home loan interest paid in under-construction period in 5 equal parts and claim it each year from the year house is ready.<\/p>\n\n\n\n The situation is similar as discussed above with the difference being your landlord or landlady is your close relative like parents\/siblings. Any such rental transaction is full with suspicion and so you should be very careful if you use this for tax saving.<\/strong> You must do the following:<\/p>\n\n\n\n There have been cases where rent paid to close relatives have been denied tax benefit by income tax department as there was NO evidence of actual transaction. So stay careful.<\/p>\n\n\n\n Do you know how much tax you need to pay for the year? Have you taken benefit of all tax saving rules and investments? Should you use the “NEW” tax regime or continue with the old one? In case you have all these questions just Download the Free Excel Income Tax Calculator for FY 2021-22 (AY 2022-23)<\/a> and get your answers.<\/p><\/div><\/div>\n\n\n\n There may be case where you have rented a place where your spouse\/parents stay (in a different city) while you own a house at the city of your employment and stay there. In this case you cannot claim HRA tax benefit as HRA is paid for staying on rent for purpose of employment. However you can easily claim home loan tax benefit.<\/strong><\/p>\n\n\n\nTax Benefit on HRA<\/h2>\n\n\n\n
How much Tax Benefit on HRA?<\/h3>\n\n\n\n
Are you Paying Too much Taxes? Download your free presentation<\/strong><\/h4>
Tax Benefit on Home Loan<\/h2>\n\n\n\n
Can we claim HRA and home loan together? – 4 Situations<\/h2>\n\n\n\n
Rented house in place of employment and own house in different city<\/h2>\n\n\n\n
How to Pay 0 Income Tax on Salary of Rs 20+ Lakh?<\/strong><\/h4>
Own house in city of employment and stay on rented house in same city<\/h2>\n\n\n\n
Own House is under-construction<\/h3>\n\n\n\n
Own house in city of employment and stay with parents\/siblings in the same city and pay them rent<\/h2>\n\n\n\n
How much Taxes you Need to Pay this Year? <\/strong>Download Our Income Tax Calculator to Know your Numbers<\/h4>
Rented house in different city and own house at place of employment<\/h2>\n\n\n\n