Can I Claim HRA and Home Loan Benefits at the Same Time? My CA Said Yes, My Colleague Said No

Can I Claim HRA and Home Loan Benefits at the Same Time? My CA Said Yes, My Colleague Said No

“I bought a flat in Pune on a home loan, but my job moved me to Bengaluru where I pay Rs 35,000 rent. My colleague swears you cannot claim HRA and home loan interest together. Am I leaving money on the table?” – a salaried product manager.

Your colleague is repeating a myth I hear constantly. The truth: yes, you can claim both HRA exemption AND home loan benefits in the same year – they are governed by completely different sections of the Income Tax Act and do not cancel each other out. What matters is whether your situation is genuine.

Why both are allowed together

HRA exemption comes from Section 10(13A) and rewards you for paying rent for the home you actually live in. Home loan interest deduction comes from Section 24(b), and principal repayment from Section 80C. These benefits exist for different purposes, so claiming one does not block the other.

Important: all the home loan and HRA benefits below apply only under the OLD tax regime. Under the new regime (the default for FY 2025-26), HRA exemption and self-occupied home loan interest are not available. So this strategy is for those who deliberately choose the old regime.

Three genuine situations where both apply

1. You own a house in one city (loan running) but work and rent in another city.

2. Your owned home is genuinely too far from your workplace to commute daily.

3. Your owned property is let out on rent while you live in a rented home.

Let’s understand this better with a real example with numbers

Anjali owns a flat in Pune funded by a Rs 2 crore home loan (annual interest approximately Rs 17,00,000), which she has let out for Rs 50,000/month (Rs 6,00,000/year). She herself lives in rented accommodation in Bengaluru paying Rs 1,20,000/month. Her basic salary is Rs 55,00,000 and HRA received is Rs 22,00,000. She chooses the old regime because, even after the Section 87A rebate available up to Rs 12 lakh of taxable income under the new regime, her income is high enough that the old regime with these deductions works out cheaper.

At the 30% slab, roughly Rs 12.4 lakh of current-year deductions saves Anjali close to Rs 3,72,000 in tax this year. The bigger prize is hidden: the unabsorbed house property loss of Rs 10,80,000 (12,80,000 loss minus the 2,00,000 set off this year) carries forward for up to 8 assessment years and can be set off against future house property income – effectively a tax shield of about Rs 3,24,000 banked for later. Letting out the Pune flat unlocks the full interest deduction; under self-occupied treatment the deduction would have been capped at Rs 2,00,000 with no carry-forward.

Watch out for these red flags

The tax department does scrutinize dual claims. Be safe: keep rent receipts and a rent agreement; if annual rent exceeds Rs 1,00,000, report your landlord’s PAN; and make sure your story is genuine. Claiming HRA for a rented home in the same building or locality as your self-occupied flat, with no real reason to rent, is a classic trigger for a notice. If you own and self-occupy the same home you claim rent for, that is simply not allowed.

Bottom line: when the facts are real, claim both with confidence for FY 2025-26 – just keep your documentation tight and make sure the old regime actually works out cheaper for you overall.

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About the Author: Sonia Dawar is a practising Chartered Accountant and the founder of Dawar & Co. With years of hands-on experience helping salaried professionals, business owners and NRIs untangle real tax problems, she is known for explaining complex tax rules in plain, practical language. Have a burning tax question? Reach her at sonia@dawarandco.com or visit dawarandco.com.