Income tax query for home loan

Hi,

I bought a home in July 2012(say A). I have a home loan for it. The flat is on my name only. Posession of flat is expected in Dec-2013.

I got married in Dec 2012. My wife is working.

My father in law bought a fully furnished flat(say B) in June 2013. There is a loan on my wife as main applicant and my mother in law and me [ I am part of it because bank wanted it to be] as co-applicant. Property is owned by my wife and my mother in law. This is a resell flat and ready for possession.

Both the flats are in the same city, and me and my wife are working in the same city.

Now here are my queries:

Let's assume, me and my wife stay in flat B. Then - 

1. Can I get full interest exemption on flat A, if I show its rent in my income? Since the flat is expected for posession in Dec-March period, can I show full interest for the year or pro-rated only for the months of posession? I also read somewhere, that I can add 20% of my last years interest to this year's interest. Please confirm. What are the options if I am unable to rent out the flat?

2. Can I pay rent to my mother in law and claim HRA? If yes, Can this rent be higher than the rent I am getting in 1? This will most likely be the case since B is a fully furnished flat.

Thanks.