Home Loan + HRA: Can You Claim Both in the Same ITR?

Q: What are the benefits of claiming a home loan deduction?

Claiming a home loan deduction has two primary benefits: Principal Repayment: Under Section 80C, you can claim up to ₹1.5 lakh per annum for the repayment of the principal amount of the home loan. Interest Paid: Under Section 24(b), you can claim up to ₹2 lakh per annum on the interest paid for a self-occupied property. For rented properties, you can claim the entire interest paid. This makes home loan deductions a powerful tax-saving tool.

Asharam Swain
Sep 10
9 min read

When it comes to tax-saving opportunities, salaried individuals often find themselves in a dilemma about whether they can claim both the Home Loan deduction andHouse Rent Allowance (HRA) exemption under the Income Tax Act. While these are two of the most popular tax benefits available, the question arises: Can you claim both at the same time in the same Income Tax Return (ITR)? The answer is yes, but there are certain conditions and rules that govern how and when these deductions and exemptions can be claimed simultaneously. Let us explore the eligibility criteria for claiming both, the tax benefits associated with home loans and HRA, and the key factors that determine your eligibility for these claims.

Table of Contents

Can You Claim Both Home Loan and HRA in the Same ITR?
Conditions for Claiming Both HRA and Home Loan Deductions
Home Loan Tax Benefits (FY 2025-26, AY 2026-27)
HRA Exemption (Section 10(13A))
Budget 2025 Changes and Their Impact on Home Loan and HRA Claims
Reporting Requirements for HRA and Home Loan in ITR
Conclusion
FAQs

Can You Claim Both Home Loan and HRA in the Same ITR?

Yes, you can claim both the Home Loan deduction and the HRA exemption in the same ITR. However, it’s essential to understand the specific conditions under which these claims can be made. These claims are mutually exclusive only in certain situations, and the eligibility largely depends on whether you are living in a rented property or paying a home loan for a property that you own. Essentially, if you are staying in a rented property, you can claim HRA, and simultaneously, if you have a home loan for a property that you own but do not live in, you can claim tax benefits on the home loan.

Conditions for Claiming Both HRA and Home Loan Deductions

To successfully claim both HRA and Home Loan deductions, the following conditions must be met:

HRA Eligibility:
You must be paying rent for a residential property, and the rent must be substantiated with proper rental agreements and receipts.
Your salary must include HRA as part of the taxable income.
You should not be receiving any tax benefit on a home loan for the same property you are renting.
Home Loan Eligibility:
You must be the owner of the property for which you are paying a home loan.
The property must not be self-occupied; it could be a second home or an under-construction property.
You can claim deductions under Section 80Cfor principal repayment and under Section 24(b)for interest paid on the home loan.

By fulfilling these conditions, you can maximize your tax savings by utilizing both benefits in your ITR.

Home Loan Tax Benefits (FY 2025-26, AY 2026-27)

Home loan borrowers can avail multiple tax benefits under the Income Tax Act, which can reduce their overall tax liability. Here’s a breakdown of the key tax benefits available under the new tax regime for FY 2025-26 (Assessment Year 2026-27):

Section 80C:
You can claim a deduction of up to ₹1.5 lakh per annum on the principal repayment of a home loan under Section 80C. This benefit is available only for loans taken for the purchase or construction of a residential property.
Section 24(b):
Interest paid on home loans can be deducted under Section 24(b) up to ₹2 lakh per year for self-occupied property. If the property is rented out, there is no upper limit to the amount of interest that can be claimed as a deduction.
Section 80EEA:
If you are a first-time homebuyer and meet certain conditions, you can claim an additional deduction of ₹1.5 lakh under Section 80EEA. This is available for homes purchased between April 1, 2019, and March 31, 2022, and applies only to properties that cost ₹45 lakh or less.

These benefits help to reduce the overall taxable income, thus lowering the amount of tax that needs to be paid.

HRA Exemption (Section 10(13A))

The HRA exemption under Section 10(13A) of the Income Tax Act allows salaried individuals to claim tax exemptions on house rent paid by them. This exemption is calculated based on the lowest of the following three conditions:

Actual HRA received: The amount of HRA you receive as part of your salary.
Rent paid minus 10% of salary: The actual rent paid for the accommodation, minus 10% of your salary.
50% (or 40% in some cases) of salary: This depends on whether you live in a metro city (50%) or a non-metro city (40%).

To claim this exemption, you must provide proof of rent payments such as a rental agreement and receipts, especially if your annual rent exceeds ₹1 lakh. Additionally, the landlord’s PAN card details need to be provided if the rent paid exceeds ₹1 lakh per annum.

Budget 2025 Changes and Their Impact on Home Loan and HRA Claims

In the Union Budget 2025, several changes were proposed that could affect the way home loan and HRA claims are treated under the Income Tax Act. One of the key changes is the increased scope for deductions under the home loan section, with new incentives for affordable housing schemes and additional tax rebates for first-time homebuyers. Furthermore, the government has proposed expanding the eligibility for tax relief on interest payments for home loans, especially for properties in tier-2 and tier-3 cities.

For HRA, the Budget 2025 includes a proposal to raise the limit of HRA exemptions in specific circumstances, including increases in rent amounts in urban areas. These changes aim to provide relief to salaried individuals by making it easier to claim HRA exemptions and home loan deductions.

Reporting Requirements for HRA and Home Loan in ITR

When filing your ITR and claiming both HRA and home loan benefits, it’s crucial to ensure that all required documentation is correctly reported.

HRA Reporting:
Report the total HRA received in your Form 16 or as per your salary statement. In the ITR, you must mention the amount of rent paid, the name of the landlord, and the PAN card details if rent exceeds ₹1 lakh per annum.
Home Loan Reporting:
Report the home loan interest paid under Section 24(b) and the principal repayment under Section 80C in the respective sections of the ITR form. You must attach the home loan statement from the bank or financial institution, showing the amount of interest and principal paid during the year.

Accurate reporting ensures that you can claim the full benefit of both deductions and exemptions, reducing the risk of discrepancies or rejections during assessment.

Conclusion

In conclusion, claiming both HRA and home loan deductions in the same ITR is possible under the right conditions. It allows you to maximize your tax savings by leveraging both tax-saving benefits, especially when you are living in a rented property and simultaneously paying off a home loan for another property. By understanding the eligibility criteria, ensuring the accuracy of your filings, and following the reporting guidelines, you can efficiently claim both deductions and exemptions. The recent changes proposed in Budget 2025 further enhance these benefits, making it an excellent time to take advantage of these tax-saving options.

For those looking for easy and efficient tax filing, TaxBuddy offers a seamless experience, making it easier to claim all eligible deductions and exemptions. It is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

Q1: Can I claim both HRA and home loan deductions for the same property? No, you cannot claim both deductions for the same property. If you are receiving House Rent Allowance (HRA) for a rented property, you cannot claim a home loan deduction on that same property. HRA is only available for rental properties, while the home loan deduction under Sections 80C and 24(b) applies to self-occupied properties or properties under construction. Thus, if you are living in your own house and claiming a home loan deduction, HRA cannot be claimed for the same property.

Q2: How do I prove the rent I pay for HRA claims? To prove the rent you pay, you need to submit a rental agreement signed by both you and the landlord. Along with this, provide rent receipts for the rent paid throughout the financial year. If the rent exceeds ₹1 lakh per annum, you will also need to provide your landlord's PAN details. The PAN details are a mandatory requirement when filing your ITR to ensure transparency and prevent tax evasion.

Q3: What are the benefits of claiming a home loan deduction? Claiming a home loan deduction has two primary benefits:

Principal Repayment: Under Section 80C, you can claim up to ₹1.5 lakh per annum for the repayment of the principal amount of the home loan.
Interest Paid: Under Section 24(b), you can claim up to ₹2 lakh per annum on the interest paid for a self-occupied property. For rented properties, you can claim the entire interest paid. This makes home loan deductions a powerful tax-saving tool.

Q4: Can I claim both deductions if I own a home and pay rent for another property? Yes, if you own a home but live in a rented property, you can claim both HRA and home loan deductions. You can claim HRA for the rent you pay for the rented property, and you can also claim home loan deductions for the home you own, provided it is not self-occupied. This situation is common among people who own property in a different city or who are in the process of purchasing a home but are renting in the interim.

Q5: How much can I claim for home loan interest under Section 24(b)? You can claim up to ₹2 lakh per annum for home loan interest on a self-occupied property under Section 24(b). If the property is rented out, you can claim the entire amount of interest paid on the loan, with no upper limit, provided the property generates rental income. The deduction is available for both under-construction properties and completed properties.

Q6: What changes were made in Budget 2025 for home loan and HRA claims? In the Union Budget 2025, the government proposed an increase in tax relief for home loan interest, particularly for affordable housing. The scope of HRA exemptions has also been expanded in specific cases, such as when employees are posted in areas with high rental costs. These changes were made to ensure greater tax relief for middle-class taxpayers, particularly those living in rented properties or investing in affordable housing.

Q7: Can I claim a deduction for home loan interest if the property is not yet ready? Yes, you can claim a deduction for the interest paid on a home loan during the construction period. However, this deduction is available only if the property is completed within 5 years from the end of the financial year in which the loan was taken. The interest is calculated on the amount paid during the construction period and will be considered part of your home loan interest claim under Section 24(b).

Q8: How can I maximize my tax savings with home loan and HRA claims? To maximize tax savings, ensure you claim deductions under both Section 80C (for principal repayment of home loans) and Section 24(b) (for interest payments). Additionally, for HRA, ensure that the rent receipts are accurate, and the correct percentage of your salary is considered for exemptions. You can also consider investing in affordable housing schemes or opting for a home loan with a higher interest rate to maximize interest deductions. Lastly, filing within deadlines ensures that you don’t miss out on deductions and that your claims are processed smoothly.

Q9: Can I use TaxBuddy to help me claim both HRA and home loan benefits? Yes, TaxBuddy provides expert assistance in accurately claiming both HRA and home loan benefits. The platform ensures that you report all necessary documents and calculate your deductions correctly, while also helping you meet the eligibility criteria. TaxBuddy’s easy-to-use interface ensures that both HRA and home loan claims are processed seamlessly, reducing the chances of mistakes and ensuring compliance.

Q10: What happens if I make an error while claiming both HRA and home loan deductions? If an error is made while claiming both HRA and home loan deductions, the tax authorities may disallow the incorrect claim or require you to file a revised return. The discrepancy could also trigger further scrutiny, leading to penalties or interest. Therefore, it's crucial to verify all the information before submitting your ITR. TaxBuddy helps in ensuring that all claims are correctly made, minimizing the chances of errors and potential penalties.

Q11: Is there a limit to the HRA exemption I can claim? Yes, the HRA exemption is calculated based on the following criteria, and the lowest value is considered:

Actual HRA received
Rent paid minus 10% of salary
50% (for metros) or 40% (for non-metros) of your salary

The exemption is based on whichever is lower of these three factors. For example, if your salary is ₹50,000, and you pay ₹20,000 in rent, the exemption would depend on these three criteria. In some cases, particularly for high-rent cities, the exemption may be significant.

Q12: Can I claim home loan benefits for a second home? Yes, you can claim home loan benefits for a second home, but only under certain conditions. If the second home is rented out, you can claim the full interest under Section 24(b) with no upper limit. If the second home is self-occupied, you can claim interest up to ₹2 lakh per annum under Section 24(b). Additionally, principal repayment on the second home can be claimed under Section 80C up to ₹1.5 lakh per annum. However, for the second home to be eligible for these benefits, it must meet the conditions set out under the Income Tax Act.