19 January 2016
One has only one own house which is let out, which is purchased vide loan. and he is staying in rented property . can he claim HRA benefit, interest on loan & not show rent income on owned house(although in actual given on rent) assuming one self occupied is exempted?
19 January 2016
if SOP is shown , Than you can not claim HRA Benefit provided if following condition satisfy Section 23(2) : Where the property consists of a house or part of a house which— (a) is in the occupation of the owner for the purposes of his own residence; or (b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of such house or part of the house shall be taken to be nil.
20 July 2024
In the scenario described, where an individual owns one house property that is let out and resides in a rented property, here are the considerations regarding claiming HRA (House Rent Allowance) benefit and deductions on the house property:
1. **HRA Benefit**: - HRA can be claimed if the individual is paying rent for the accommodation where they currently reside. - To claim HRA, the individual must provide evidence of rent payment to the employer. The amount of HRA that can be claimed is the least of: - Actual HRA received from the employer. - Rent paid minus 10% of salary. - 50% of salary (if residing in metro cities) or 40% of salary (if residing in non-metro cities).
2. **House Property (Let-Out)**: - The individual owns a house that is let out. As per income tax rules, the rental income from this property should ideally be shown as taxable income. - If the property is let out, irrespective of whether the individual stays in a rented property or not, the rental income is taxable under the head "Income from House Property". - However, there is a provision under the Income Tax Act (Section 23(2)) that allows one house property to be considered as self-occupied and not subject to tax on rent, provided certain conditions are met. This can be claimed even if the actual let-out property is not self-occupied.
3. **Interest on Housing Loan**: - The interest paid on housing loan for the property that is let out can be claimed as a deduction under "Income from House Property". - This deduction is allowed even if the property is let out and the individual resides in a rented accommodation.
4. **Claiming HRA and Deductions**: - Yes, the individual can claim HRA benefit if they are staying in a rented property and paying rent. - The interest paid on the housing loan for the let-out property can also be claimed as a deduction under "Income from House Property". - The rental income from the let-out property should ideally be shown as income, but if the property qualifies as self-occupied as per tax rules, the individual can claim exemption from tax on the rent received.
5. **Tax Compliance**: - It’s important to maintain proper documentation and evidence of rent paid for claiming HRA. - Ensure that the rental income from the let-out property is accurately calculated and reported in the tax return. If the property is deemed self-occupied, ensure compliance with the conditions specified under the Income Tax Act.
In conclusion, while the individual can claim HRA benefit for the rented accommodation they reside in, the interest on housing loan for the let-out property can also be claimed as a deduction. However, the rental income from the let-out property should generally be shown as taxable income unless it qualifies as self-occupied as per tax rules. It’s advisable to consult with a tax advisor or chartered accountant for specific advice tailored to individual circumstances.
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