29 February 2012
I have two houses one in mumbai & another in pune. I am working in pune but because of some reason I dont want to live in my own house & want to treat it as deemed to be let out.Can I claim HRA exemption.
28 July 2024
Yes, you can claim House Rent Allowance (HRA) exemption even if you own houses in other cities, provided you meet the necessary conditions. Here’s how it works and what you need to keep in mind:
### Claiming HRA Exemption
1. **Owning Property in Different Cities:** - You can claim HRA exemption on rent paid for accommodation if you are living in a rented property while owning property in another city. The property you own can be treated as "deemed to be let out" under certain circumstances.
2. **Conditions for HRA Claim:** - **Rent Payment:** You must be paying rent for the accommodation you are living in. - **Use of Property:** The property you own can be declared as "deemed to be let out" even if you are not living in it. You must ensure that you are genuinely paying rent for your accommodation in the city where you are working.
### Treatment of the Property Owned
1. **Deemed to be Let Out (DLO) Property:** - **Property in Mumbai:** Since you are working in Pune and do not live in your Mumbai property, you can treat the Mumbai property as deemed to be let out. - **Income from House Property:** You would have to compute the income from house property for the Mumbai house as per the standard provisions for deemed to be let out properties (i.e., you will declare the notional rent as income).
2. **Restrictions on Proximity:** - There is no specific restriction regarding how close or far the owned property should be to your rented property for claiming HRA. The key requirement is that you should genuinely be paying rent for your accommodation.
### Summary of Steps:
1. **Claiming HRA:** - **Rent Paid:** Ensure you have a valid rent agreement and receipts for the rent paid. - **Documentation:** Maintain records of the rent payments and rental agreement.
2. **Income from Property Owned:** - **Deemed to be Let Out:** Treat the Mumbai property as deemed to be let out and compute the income from it accordingly. - **Declaration:** Declare the income from the Mumbai property in your tax return and pay tax accordingly.
### Tax Treatment:
- **HRA Exemption:** You can claim exemption under Section 10(13A) for the rent paid if you are living in a rented accommodation in Pune. - **Income from Property:** The Mumbai property will be treated as deemed to be let out, and you need to declare notional rent as income under Section 22 of the Income Tax Act.
### Example:
- **Rented Accommodation in Pune:** If you are paying ₹30,000 per month in rent, you can claim HRA exemption for the full amount (subject to the HRA calculation rules). - **Mumbai Property:** It will be treated as deemed to be let out. If the expected rent is ₹20,000 per month, this will be considered as income from house property.
By following these guidelines, you can legitimately claim HRA exemption while owning property in another city and ensuring that your tax compliance is in order.
CAclubindia
