Can You Claim Both Housing Loan and HRA for Tax Exemption? Seeking Clarity

Dear All,

Please clarify my following doubts:

1. One of my colleagues bought land at his native place and is paying off the housing loan. He is currently residing in Chennai on rent. Now, my doubt is, can we take a housing loan and HRA for tax exemption?

2. Another colleague is residing in a rental house. He bought a flat in Chennai, and his parents are residing there. Can he claim the housing loan as well as HRA for tax exemption? He says he claimed both last year.

Regards,
Sudha S

With regard to question 1,

While there is no restriction on claiming both HRA exemption and housing loan interest rebate at the same time, the loan interest rebate can be claimed only after the construction of the property is completed. In your post, you have mentioned that the loan is for the purchase of land. Such a loan cannot be construed as a housing loan, and hence the interest payment on such a loan cannot be used for the calculation of income tax exemption.

With regard to question 2,

Your colleague can claim both. The only question is about the annual rental value of the property which is occupied by the parents of your colleague: "should it be zero or should it have a notional value?" This question has to be answered by your colleague. Of course, I am assuming that your colleague's parents do not pay any rent to your colleague. If they do, then the rental amount should be considered while calculating the income from the house property.

Regards, T E Gautham Email: gautham@tibs.in Website: Tandem Integrated Business Solutions Blog: blog.tibs.in

Dear friend,

Reply for Query 1: First of all, he has taken a loan for purchasing the land. So, he can claim HRA only for tax exemption.

Reply for Query 2: There is no barrier to claim exemption for house rent and housing loan which is being occupied by his parents.