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How to Claim HRA and Home Loan Tax Exemptions

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Created on
February 23, 2023

Summary

What’s Inside

House Rent Allowance (HRA) and home loan repayments both offer tax benefits to taxpayers. If you receive HRA as a part of your salary and are also repaying a housing loan, then this article should clear the air on the subject.

How to claim an HRA exemption?

As per section 10(13A) of the Income Tax Act, 1961, the least of the following amounts can be claimed as an exemption if you stay in rented accommodation:

  • The actual HRA received
  • Annual rent minus 10% of your annual salary
  • 50% of your basic salary if you live in a metro city or 40% if you live in a non-metro city 

HRA calculation:

You can use this HRA calculator to calculate your HRA exemption.

How to claim home loan deductions?

If you have availed of a home loan, you will be paying off the principal and the interest component as home loan EMIs. You can claim tax deductions on this as follows.

Can You Claim HRA and Home Loan Tax Benefits Simultaneously?

The short answer is yes. You can claim the tax benefits on HRA and home loan repayments, subject to different conditions in different scenarios as follows. 

Use your HRA and Home Loan Repayments to Save Tax

If you receive HRA as a part of your salary and are also repaying a home loan, you can save taxes as outlined above. Furthermore, mutual funds like Equity Linked Savings Schemes (ELSS) can also help you save tax while simultaneously earning market-linked returns. Invest in these mutual funds or other funds of your choice with Fi Money commission-free. 

Frequently Asked Questions

Can you claim your mortgage on your taxes?

Yes, the amount of your home loan or mortgage you repay during a given financial year can be claimed as a deduction from your total taxable income. The principal component of your home loan EMIs is deductible up to ₹1.5 Lakhs per year u/s 80C of the Income Tax Act, 1961, while the interest component is deductible up to ₹2 Lakhs per year u/s 24 of the Act. 

What kind of credit score do I need to get a loan for a house?

To be eligible for a home loan, it is advisable to have a credit score of 750 or more. The higher your credit score, the more favourable the terms and conditions of your home loan.

Disclaimer

Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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