Can you claim HRA for more than one rented house at the same time?

Living in one city, renting in another: How HRA and home loan tax rules apply

• HRA exemption can be claimed for only one rented house.
• Home loan interest deduction allowed for both let-out properties.
• Loss from house property can be set off up to Rs 2 lakh per year.

Did our AI summary help?

Confused about how tax rules apply to real-life housing decisions? In today's Ask Wallet Wise query, we decode whether you can claim HRA for multiple rented homes while also availing home loan tax benefits on properties bought in different cities

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

I am a software engineer working for a company in Bangalore. I am allowed to work from home for 15 days a month. I am paying rent for 2 houses - One for my Gujarat-based rented property and the other for my Bangalore house where I live 15 days a month. I receive house rent allowance of around Rs 8 lakh every year. I am planning to buy 2 flats in  different cities in Gujarat. I will let out both. I expect rental of Rs 8,000 for each flat. Can I claim HRA for both the houses as well as tax benefit for interest on home loan for them?

Expert's Advice: The benefit of House Rent Allowance (HRA) is available under the old tax regime to a salaried person in respect of rent paid by him for the house occupied by him. The quantum of exemption available is restricted to least of the following:

1.    Excess of rent paid over 10 percent of the basic salary

2.    50 percent of the basic salary for metro cities for rest it is 40 percent of the basic salary

3.    HRA actually received

As per the language of Section 10(13A) under which the exemption is allowed it seems that the exemption can be claimed only in respect of one house occupied by the employee. However, there is no restriction as to whether the same can be claimed in respect of place of duty of the employee.

So in my opinion, you can avail the HRA benefit in respect of any one house in respect of which you are paying the rent. The lawmaker did not anticipate that the concept of work from home will get wide prevalence and will require people to take on rent two houses but this is the law as of now.

As far as deduction for interest payment on home loan is concerned, it seems you are following the old tax regime and therefore you will be able to claim the deduction for full interest paid for home loan for both the houses but will be able to set off loss under the head house property upto Rs 2 lakh against other income during the same year.  The loss not so adjusted is allowed to be carried forward for next eight years to be adjusted against house property income.

In case you opt for new tax regime, loss under the house property income is not allowed to be set off against income under other head or carried forward so you will be able to claim interest on home loan for both the houses taken together only to the extent of taxable rent of all the let out properties taken together during the year. Please note that no deduction is allowed under the new tax regime in respect of self-occupied property.

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