Maximize HRA and Home Loan tax benefits

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  1. Manish Singhal

    Manish Singhal New Member

    Hello Sir,

    I have a query related to tax benefits as below:
    I want to purchase a property in the same city where I'm working.
    However this property is little far from where I work and also from daughters school. I plan to take flat on rent close to office and her school in the same city.
    1. Am I allowed to claim HRA along with regular tax benefits of home loan under section 80C(stamp duty, registration, principal repayed) and 24( interest repayed)?
    2. Can the interest re-payed will be fully tax exempted as the property would not be self occupied(although being in same city, where HRA is being claimed)?
    3. If I rent out the purchased property then can I continue to claim HRA, principal in 80C, full interest in section24?
    4. How best I can plan this to take maximum benefits on taxes?
    5. Can I also add my wife as co-applicant in property and have seperate benefits under section 80C(1.5 Lakh seperate from my 1.5Lakh) for stamp duty and registration?
    6. Can I also add my wife as co-applicant in property and have seperate benefits under section 24 for full interest paid (by some part in her returns + some part on my returns, if the tax exemption under this section is limited and my interest paid exceeds that limit)? FYI. my wife is not salaried but has limited income from private tutions.
    7. Please provide as much clarity as possible on this to help me take maximum benefits?

    Thanks & Regards,
    Manish Singhal
     
  2. Manoj Mehra

    Manoj Mehra Active Member

    1. Yes, you can claim both HRA as well as Home Loan Benefits under Section 80C as well as Section 24
    2. If you give the property on Rent, it would be treated as a Let out property and then you would be able to claim full deduction for interest.
    3. Yes, you can claim all 3 togethor
    4. Answer to this is mentioned in Pt 2 above
    5. If she is the co-owner in Property as well as Co-borrower - you both can claim deduction of Rs. 1.5 Lakhs each
    6. If she is the co-owner in Property as well as Co-borrower - you both can claim deduction for interest as well
    7. I've tried my best to answer all your queries. Feel free to ask in case of any other queries.
     
  3. Manish Singhal

    Manish Singhal New Member

    Thanks Manoj.

    I got some other inputs here causing confusion.. to re-confirm...
    Are you sure that if I let out my loaned flat in say city 'A' and myself live in a rented flat in the same city 'A' (some other locality).. then I can claim HRA as well as full interest exemption under section '24' + principal under section 80C?

    Does income tax allow to claim HRA in same city where you own a flat(which may or maynot be rented out?) please explain both cases..

    Thanks for your valuable inputs....

    Regards,
    Manish Singhal
     
  4. Manoj Mehra

    Manoj Mehra Active Member

    Yes, the Income Tax Act does allow you to claim both HRA as well as Home Loan Deduction even when you are in the same city.

    I'm 100% sure on this.
     
  5. Manish Singhal

    Manish Singhal New Member

    Thanks Manoj!
    1. Can you also help to understand how the tax exemption be claimed for under construction property both for principal and interest in each of below cases:
    a. before possession (as property is under construction)
    b. after possession.
    can you also help to understand the limits for each of the above cases.

    Thanks for your help!
     
  6. Manoj Mehra

    Manoj Mehra Active Member

    Before possession
    1. No deduction for Principal
    2. Interest would be accrued and allowed to be claimed in 5 equal installments after completion of construction
    After possession
    1. Deduction under Section 80C for Repayment of Principal - Rs. 1.5 Lakhs
    2. Deduction for interest - Rs. 2,00,000 for self occupied property and in case of non-self occupied property - their is no limit for claiming the deduction
    For a detailed read, kindly refer: http://www.charteredclub.com/tax-benefit-on-home-loan/
     
  7. sauravk25

    sauravk25 New Member

    Hi, I have a quick question as all the forums have been very confusing. I have taken a home loan in 2011 and will receive a possession this month. Its going to be a deemed to be let out property as I am currently working somewhere else. What tax benefit can I claim given the property has been under construction for over 3 years. Some forums say that there is no limit as its going to be considered as an LOP, while some say it will be reduced to 30000. Please clarify.
     
  8. Manoj Mehra

    Manoj Mehra Active Member

    @sauravk25 : In case of self occupied property, the benefits would be reduced to Rs. 30,000 as the property was not constructed in 3 years.

    However, in case of non-self occupied property - there is no impact and the total interest would be allowed to be claimed as a deduction.

    Therefore in your case their is no limit for claiming the deduction.
     
    sauravk25 likes this.
  9. sauravk25

    sauravk25 New Member

    Thank you Manoj, really appreciate the prompt response. I believe most of the info out there is about Self occupied properties, hence the confusion.
     
  10. Manoj Mehra

    Manoj Mehra Active Member

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