Can one claim both HRA and home loan benefits? How should a vacant house be classified in ITR?

Can one claim both HRA and home loan tax benefit?

If you live in a rented home but own another house on loan, can you claim both HRA and home loan tax benefits? Today's Ask Wallet-Wise query also answers how to classify a vacant property - self-occupied or let-out - while filing ITR.

Moneycontrol’s Ask Wallet-wise initiative offers expert advice on matters related to personal finance and money-related queries. You can email your queries to askwalletwise@nw18.com, and we will try and get a top financial expert to address your queries.

I am working for a Multi-National Company in India and receive House Rent Allowance (HRA) as part of my salary from my employer. I had booked a flat a few years back and obtained possession of the flat in March 2025. Currently, I am staying in a rented house. Can I claim both HRA and tax benefits on the housing loan for the whole financial year 2024-2025? I have let out the flat from 1st August 2025. Since my house was neither occupied by me nor let out earlier, can I still claim tax benefit on the home loan for the last financial year? If yes, should I declare it as self-occupied or let out in my ITR form?

Expert Advice: There are no restrictions on you claiming HRA while claiming tax benefits in respect of a home loan, as long as you satisfy the conditions laid down under the relevant sections. For claiming exemption for HRA received from your employer, section 10(13A) requires that you should be staying in the residential house for which you are paying rent and which is not owned by you. Since you are staying in the rented flat, you can claim the HRA benefit as long as you stay in a rented house.

Since you obtained possession of the house during the financial year 2024-2025, you are allowed to claim a deduction for repayment of the home loan under section 80C and for interest paid under section 24(b) as per the provisions of income tax laws. Since the property was not actually let out during the financial year 2024-2025, you can claim the same as self-occupied for income tax purposes.

Under tax laws, a person is allowed to have a maximum of two house properties as self-occupied. The tax benefits for a home loan are available for the full year in which possession of the property is taken. So you will be able to claim the benefits of HRA as well as a home loan for the full year. Once you start letting out the house, you can claim vacancy allowance for the period during the year when it cannot actually be let out. Please note that the benefits of HRA, as well as a home loan, are available only if you opt for the old tax regime.

Since the possession was obtained only in March, you would not have been able to claim the home loan benefits with your employer while deducting tax from your salary, and even in future it may happen that your employer may not grant you both the benefits while deducting tax at source, but you can certainly claim both the benefits while filing your ITR.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.