Income tax exemption for buying a flat

1. If I let out my flat for rent, can I claim both HRA and interest amount paid-no cannot claim either

Dear gopi kiran,

You have not cleared the situation, i mean are you living in banglore or not?

Anyway, if you are living in bangalore in a rented house or any other house then you will not get benefit of HRA bcoz the house which you have purchased is in bangalore whether let out or not. But if you are living in another city then definitely you will get HRA benefit.

Interest benefit u/s 24 and tax benefit u/s 80c for payment of loan amount will definitely be available in every case whether property is let out or not.

As far as rental value is concerned take the actual rent which you are receiving bcoz actual rent will always be higher than the fair rent, municipal value and standard rent. Even according to calculation actual rent will come.

Fair rent is the rent of similar type of property.

Municipal value is the value on which house tax is calculated by municipality.

Standard rent is rent under rent control act.

Hi Anubhav,

Thanks for the reply.

I reside in Bangalore and want to purchase a flat here itself. But I want to give it for rent.

So as per your reply, I can't claim both HRA and interest for IT exemption. But I've seen a few links where it was mentioned that I claim HRA, interest and principal.

Given the link below for your reference. Please clarify my confusion.

https://in.finance.yahoo.com/blogs/strategic-moves/claim-not-claim-hra-home-loan-dilemma-093105977.html

Thanks

Hi Gopi kiran,

Well if you are residing in bangalore in a rented house and you want to purchase your own flat then for taking HRA benefit you will have to justify why you have chosen to stay on rent and still claim the HRA exemption. Bcoz atleast there should be nexus between non occupation of your house and your employment.

As far as interest and principal is concerned that will always be allowed to you whether you are living in your house or not OR whether it is in bangalore or any other place. For claiming interest and principal amount there is no connection with HRA. So even in case if you are not getting HRA benefit for any reason, still you can claim interest and principal.

I think now you will not get any confusion.

As per my knowledge, there is no restriction to claim  HRA & HL interest even when the purchased flat is in the same city.

Because, for claiming HRA,  the requirement is only the "Proof of rent paid". Also, for claiming HL interest (Loss on House property), the requirement is the "Proof of interest paid on HL". The provisions of the Act have not given any special restriction like the owned property should not be in same city.

There are relevant case laws available in this favour.

Hope the experts will agree to it.