Are you stepping towards homeownership via a home loan, but are still obligated to continue leasing? If so, thenyou need to know all that there is to know about Home Rent Allowance (HRA) benefits. As per Section 24 and 80C of the Income Tax Act, housing loan applicants can claim HRA deductions together with home loan tax benefits, provided they meet certain conditions. Read more to find out.
Conditions under Which You Can Claim HRA Together with Home Loan Interest:
Condition #1. Owning a house in a different city
HRA deduction and home loan tax benefits are available to those whose rented apartments are in a city different from the one in which they are planning to own a home. For example – you are eligible for HRA deduction if you rent an apartment in Delhi but apply for home loan to purchase a home in Chennai. In this particular situation, a home loan borrower is allowed to claim both HRA deduction and tax benefits on the principal amount, and the home loan interest repaid on it.
Condition #2. Taking a home loan for an under-construction house
If an under-construction home loan applicant files for an HRA deduction, they are eligible to claim it along with housing loan tax benefits. And once the construction of the property is over, they can claim for reduction of the total home loan interest paid till the date of property completion.
Condition #3. Owning a house but being unable to move in
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. However, even under such circumstances, the Income Tax Act allows the claiming of HRA deduction along with home loan tax benefits. However, there is a condition – the distance between the home for which you’ve applied for a housing loan, andworkplace should be more than 35 km.
Condition #4. Residing in a rented house and leasing the owned house
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.
Circumstances Under Which You Cannot Claim HRA Deduction
HRA deduction, along with home loan interest, cannot be claimed by self-employed individuals and is only available to salaried individuals who own a house but are living in rented accommodation. Moreover, if your rented accommodation is in the same city as the one in which you are buying a house, (except it is an under-construction property, or you show a valid reason for being unable to move into your home), you cannot claim HRA deduction.
Are you planning to own a house? Well, now that you know about your HRA benefits, there’s no reason to delay availing easy home loans.
Also, make sure to check your home loan eligibility and EMIs beforehand. For this, you can use free home loan eligibility calculator and home loan EMI calculator.
Also, remember that some lenders offer highly competitive home loan interest rates in India. So, don’t forget to compare home loan rates before you apply.