Can we claim tax benefits on home loan and HRA together?
By Joseph Samson
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A house is one of the biggest investments we would make in our lifetime. Most of us might already know that our home loans are eligible for tax benefits under the Income Tax Act but there is yet another component that is connected to our taxable income. This is known as House Rent Allowance (HRA).

HRA is a component of your salary package and is given by an employer to an employee for the sole purpose of meeting the cost of renting a home. An HRA allowance is allowed to any person who is staying in a rented property and the rent should exceed 10% of the basic salary. But if one is serving a home loan then is he eligible for the HRA benefit is an important concept that needs a thorough study.

However HRA and home loan provisions are two different issues as far as the Income Tax Act is concerned and one does not influence the other. Home loans are entitled for Tax benefits under Section 80C (Tax benefit on principal repayment) and Section 24 (Tax benefit on interest payment) of Income Tax Act. On the other hand HRA benefit can be availed or not depends on certain situations. Let us evaluate these situations:

1. Living in your own home

If you have taken a home loan to purchase the house you are residing in then you are not entitled for the HRA benefit since you are not residing on a rented property. However tax benefits on principal repayment and interest payments can be availed by the person.

2. Home possession in another city

For instance you have a house in one city for which you have taken a home loan and you reside in another city due to work or similar reasons, then you are eligible to avail all the benefits including HRA, tax benefits on principal repayment of home loan and tax benefit on interest payments of home loan.

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