Rebate of housing loan & hra

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This query is : Resolved

dv arora (Querist)

25 October 2013 Kindly advise
an employee (basic salary= 40000)who is staying in rented accommodation in Delhi and paying rent @ Rs. 15000/p.m. wants to take the rebate of both HRA and housing loan (principle and interest) for a property owned by himself in Noida. He wants to show his rental income from the property in Noida as his rental income (Rs. 7000/p.m.) Can we give both the rebates to the employee

Nikhil Kaushik

Nikhil Kaushik (Expert)

26 October 2013 if you are in receipt of HRA as a salary component, then you can claim HRA. Plus, you can also claim deduction for interest under 24B and principle repayment under 80C. With regards to deduction for interest, there is no limit as you have rented out the property.

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CA Pallav Singhania

CA Pallav Singhania (Expert)

26 October 2013 Yes you can both but there can be different Situations....

Situation 1:
You own a House in another city:

You can very well claim HRA exemption and deduction on interest on home loan if you own a house in city other than your current residing city and presently you are in a rented accommodation.

Situation 2:
You are staying in a rented house in the same city where you have your own house:

For example;
you have bought a house for which you are repaying principal and interest on the loan taken for it, but now you aren’t residing in it for some genuine reasons like, the house that you have bought is far away from your office, thus you opted to stay in a rented house in the same city, which is nearer to your office.

Situation 3:
Staying with parents/siblings, also paying rent to them:

If you are staying with your parents or siblings, you can pay them rent to claim House Rent Allowance exemption. This is possible only if the property is registered in the name of your parent/sibling. Only thing what you have to do is to show that you are paying rent to your parents/siblings. Just make sure that your parents or siblings are filing I-T returns.

regards,

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dv arora

dv arora (Querist)

26 October 2013 Thanks Aryan,

Can u let me know, in case of situation 2 is it necessary to rent out the owned property and showing the rental income in return for claiming the rebate of Principal and Interest.

Thanks

CA Pallav Singhania

CA Pallav Singhania (Expert)

26 October 2013 no there is no such logic...

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