Can You Claim Both HRA & Deduction on Home Loan Interest?

By CA Mohammed S Chokhawala

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Updated on: Aug 24th, 2025

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2 min read

Yes, you can claim both HRA exemption and home loan deductions if conditions are met. Even if both the houses are in the same city , HRA and home loan interest can be claimed. However, ensure that you are not claiming home loan on self occupied property. You can claim interest on let out house property. Also, ensure that both claims are genuine, backed with valid rent receipts, loan documents, and proof of occupancy.

Key Highlights

  • You can claim both HRA and home loan interest, provided they are for two different properties 
  • They can be claimed even if both the house properties are located in the same city.
  • You cannot claim HRA and home loan interest on the same property. 

What is HRA?

HRA or House Rent allowance under section 10(13A) is a percentage of an employee’s basic salary that is provided to cover the rent paid by taxpayers for residential accommodation. However, the amount of HRA paid to employees depends on the location of residence and the salary package. 

HRA is not fully taxable, and a certain portion can be claimed as an exemption. The amount of HRA exemption will be calculated as the least of the following:

Metro Cities (Delhi, Kolkata, Mumbai and Chennai)Other Cities
Actual HRA ReceivedActual HRA Received
50% of Salary40% of Salary
Rent paid - 10% of SalaryRent paid - 10% of Salary

Home Loan Interest Deduction

According to the following sections of the Income Tax Act, 1961, taxpayers can deduct the principal payment and interest on a home loan.

  • Principal payment on home loan qualifies for deduction under section 24(B) of the Income Tax Act, 1961
  • Interest on home loan qualifies for deduction under section 80C of the Income Tax Act, 1961
  • You must have availed a home loan for a property in your own name or jointly with your spouse.

However, there are certain conditions an assessee needs to comply with to avail the deductions above.

  • An assessee has to be the legal owner of the property against which home loan has been availed.
  • The maximum deduction of Rs. 1.5 lakh can be availed against the principal repayment of the home loan. However, the taxpayer should not sell the property for 5 years to receive this benefit. In case of a sale of house property, a deduction will be added back in the year of sale.
  • A maximum deduction of Rs. 2 lakh can be claimed for interest payment on a home loan for a self-occupied property. However, the acquisition or construction of the property must be completed within five years after the financial year in which the home loan was borrowed.
Deduction of HRA and Home Loan Interest

Can we Claim HRA and Home Loan Interest together?

Yes, you can claim HRA tax exemption and home loan tax deduction as well if you meet certain conditions: 

Condition Can you claim HRA tax exemption and Home Loan Tax Deduction
You have availed a house on loan and you reside at a rented accommodation in another cityYes
You have availed a house on loan and you reside in the same city in a rented accommodation due to work or children’s schoolingYes
Provided the condition is genuine.
You have availed a home loan to buy an under construction apartment/house and you live on rent elsewhereYes
You can claim only the home loan interest deduction in case of under-construction property over five years in equal instalments starting from the year the construction is completed.
 
You rent the house you have availed with a home loan and you live in a rented accommodation elsewhereYes
You will have to show rental receipts from your own house to calculate income tax liability. 

If the house property is vacant or occupied by other family members, it is still considered self-occupied property.

Note: Taxpayers paying taxes under the Old Tax Regime are eligible to claim the above exemptions or deductions.

HRA and Home Loan Interest Deduction Example

Aryan lives in Gurgaon and pays a rent of Rs. 10,000 per month; he gets an HRA of Rs. 15,000. His basic salary is Rs. 40,000. Aryan has taken a loan to buy a house in Bangalore, where his parents live. The interest he pays on the loan for his house is Rs. 20,000 per month.

The amount of HRA exemption available to Aryan will be a 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 Head of Salaries.

Related Articles:

Home loan-related tax benefits on our guide

HRA calculator to determine HRA exempt from tax

Loss on house property due to home loan.

Frequently Asked Questions

I have my house property in Chennai which is let out and I live in a different house in Chennai and pay rent for that. Can I Claim HRA exemption ?

No, you cannot claim an HRA exemption if you are living in a different house in the same city and own a house in the same city. Still, you can claim the benefit, only if you can substantiate with a valid reason for your stay, one of the reasons could be that the place of work is far from the house you own, it is necessary to stay in a rented house to ease the commutation.

Can you claim both the HRA tax benefit and Home Loan tax deductions if you are staying in a house bought on loan and you work in the same city?

No, you cannot claim both HRA and home loan interest on the same property.

Can I claim HRA and home loan interest on two properties located in the same city?

Yes, you can claim deduction on HRA and home loan interest on two different properties, even if located in the same city. But you cannot claim both on the same property.

About the Author
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CA Mohammed S Chokhawala

Content Writer
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I'm a chartered accountant, well-versed in the ins and outs of income tax, GST, and keeping the books balanced. Numbers are my thing, I can sift through financial statements and tax codes with the best of them. But there's another side to me – a side that thrives on words, not figures. Read more

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