Homeowners paying back on their home loan and getting HRA as part of their salary can avail both the house property-related tax benefits to lower their taxable income.
Sometimes you work in one city and live on rent but your family resides in another city and you buy a home where your family is.
A homeowner can claim:
- HRA exemption towards rent payment
- Deduction on home loan interest as per Section 24
- Principal Repayment under Section 80C
Aryan can claim HRA as follows –
The amount exempt to be taxed from HRA will be minimum of these three:
- HRA received = Rs. 15,000
- 40% of Basic since he lives in Gurgaon = Rs. 16,000
- Rent paid – 10% of Basic = Rs.10,000 – Rs. 4,000 = Rs. 6,000
Therefore HRA exempt = Rs.6,000. Remaining HRA of Rs 15,000 – Rs 6,000 = Rs.9,000 will form part of his taxable income under Salaries on account of HRA.
Regarding Income from House Property and claiming interest on home loan deduction – this will be allowed as follows:
Gross Annual Value of the property is Nil(because his parents live in the house property)
Less: Deduction on Interest on home loan = Rs 2,00,000 (limited to Rs.2,00,000 for self-occupied house)
Net Loss under the head ‘Income from House Property’ = (-) Rs 2,00,000 which will be added to his taxable income.