I took possession of my house in October 2021. I currently live in another rental house. Am I eligible for both HRA and home loan tax benefits for the full year? I intend to rent my house although it is not currently occupied by any tenants. Can I still benefit from a tax advantage on a mortgage? If so, should I declare it as self-employed or on hire in my ITR form.
Answer: There is no restriction on you claiming the HRA while claiming tax benefits in respect of a home loan as long as you meet the conditions set out in Section 10(13A) and 80C and 24 (b). Since you are paying rent for the house you are staying in that is not yours, you can apply for the HRA benefit.
As you plan to let the property and if you are able to do so before March 31, you can show this property as rented and claim the tax benefits for interest paid under section 24(b) and for repayment of home loans under Section 80 C up to Rs. 1.50 lakh along with other eligible items. The tax benefits for the home loan are available for the entire year in which possession of the property is taken. Thus, you will be able to claim the benefits of the HRA and the home loan for the full year, as you intend to stay in the rented house for the whole year.
Income tax laws allow a person to have a maximum of two homes as self-occupied, so even if you are unable to rent out your home by March 31, you can show it as self-occupied and I don’t think there should be any problem as long as this house is not actually rented within the year. Once you have started renting the house, you can claim vacancy pay for the time of year when it cannot be rented.
Balwant Jain is a tax and investment expert and can be reached on [email protected] and @jainbalwant on |Twitter
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