In the present day scenario, owing to the rising prices of real estate, you may find it a little difficult to bear the burden of a significant Home Loan, especially, if you are also required to pay rent for your place of residence. So, what is it that you can do about this situation?
Well, you can at least look reap tax benefits that you are entitled to. In India, you can enjoy these benefits under two heads. Let us take a look at each of them.
As per the Income Tax Act, 1961, you can claim HRA exemption under section 13(A). The following aspects are considered for the same, and the lowest of them is picked for exemption.
The tax benefits on a Home Loan can be enjoyed under the section 80C of the Income Tax Act. When it comes to the repayment of the principal amount, a deduction of up to 1.5 Lakhs can be claimed. As far as the interest on the loan is concerned, you can enjoy a claim of up to 2 Lakhs. This benefit is as per the section 24B of the Income Tax Act.
Now that you know about the tax benefits under each of these heads, the question arises – Can you claim a tax rebate on both, home loan as well as house rent? Fortunately, the answer is YES. However, in order to enjoy this unique perk, you should meet one of the following conditions:
In case, where you have purchased a home in a city, other than the town you live in, it is obvious that you would need to rent an apartment in your city of residence. In this situation, you can conveniently claim the benefits.
If however, both the homes are in the same city, you must have a valid reason for living in a rented apartment, such as the distance from your workplace, or the size of the house that you own. If need be, you may be required to answer some questions pertaining to the situation to the tax authorities.
In case, you have purchased a home, but it is still under construction, and you need to stay in a rented apartment, for the time being, you are entitled to claim benefits on both fronts, i.e., Home Rent as well as Home Loan.
If you have a home under your own name but are still residing in a home owned by your parents, siblings or spouse, and pay rent for the same, you can claim the much-coveted dual benefit.
In this case, however, it is crucial that you have a proof of payment of rent to the owner of the house. Moreover, the owner needs to list the received rent as a source of income, while filing their income tax returns.
Now that you are aware of the nuances of enjoying tax benefits on Home Loan as well as on house rent allowance wait no more before you apply for a Home Loan! After all, buying a home will not only offer you and your family a safe haven, but will also instil the sense of security that comes with an asset as significant as a home!
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