Claiming home loan interest and hra together

Hi, I have a interesting case that I wonder if anyone in this forum could help

- I have a house in Bangalore that I very recently rented out

- I work in Pune right now and stay in a rented place

- I claim both HRA exemption for the rent I pay in Pune and Home loan interest exemption up to 1,50,000/- for my bangalore apartment

- I got a transfer now and will be moving to Bangalore soon. My office is in the SAME LOCALITY where my apartment is located. I'm planning to rent an apartment instead of staying on my own apartment as I don't want my tenant to vacate my apartment immediately as he has just moved in

I wanted to know, if in the above scenario where my own apartment and my rental house are in the SAME LOCALITY, am I eligible to claim both HRA exemption for the rent I will be paying and claim tax exemption on the home loan interest that I pay. Of course I'll show the rental income I earn from my apartment minus 30% maintenance fee

I was trying to go through the Income tax article but I dont find a specific illustration for such a scenario. The IT article mentions that for let out property tax exemption can be claimed for the total loss incurred on the property (i.e. Loss/gain on property = Rental income from property - Maintenance (30% of rental income) - Interest paid on home loan) . However, definition of let out property is not very clear in the IT article and I'm not sure if my apartment would fall under the 'Let out property' category in the above scenario.

My employer will accept only one of the two, (HRA or home loan interest), but I'm happy to pay the tax upfront and claim a refund while I file my returns if I'm allowed to claim both

Would be really helpful if someone could clarify this as I was searching the whole of internet unsuccessfully and finally thought I shall ask you tax EXPERTS

In my opinion you can choose one of the following.

1. If you choose to stay in your own aprt, Your apartment would be self occupied property and you can claim upto Rs 150000/-housing loan interest deduction with annual value nil.

Also, you will not be entitled to claim HRA deduction.

2. If you stay in a rented place and also earn rent from your own house, It will be Let out property. The rent you earn or municipal valuation (W/e higher) will be taxed after reducing property taxes, 30% deduction and the housing loan interest.

As for the rent you pay and receive HRA, there are only 3 conditions for HRA deduction( employer should give specific allowance for house rent, rent paid should exceed 10% of salary and that place should not be owned by employee). So, I think you can claim HrA deduction

Also pl refer to the following link.

/experts/hra-exemption-available-or-not--566650.asp#.UoGwUnBAS8o