What income tax rules allow when you claim HRA and home loan interest together

Tax rules around HRA and home loan interest

• HRA exemption can be claimed for rent paid
• Claim full-year home loan interest after possession
• Pre-possession interest can be claimed in 5 equal annual instalments

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Many homeowners shift into their new house midway through the year, raising questions about overlapping tax benefits. Today's Ask Wallet Wise query explains how HRA exemption and home loan interest deductions work when possession and occupancy happen in different months.

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I got possession of my house in June 2025 and moved into it on October 1, 2025. Can I claim HRA exemption for the rent paid till September 2025 as well as tax benefits for interest on the home loan for the same year? How can I claim the interest paid for the period prior to getting possession of the house?

Expert's Advice: There is no restriction on a taxpayer claiming both HRA exemption and home loan benefits in the same financial year, provided the conditions prescribed for each benefit are satisfied.

HRA exemption is available if you are actually paying rent for a residential accommodation that is occupied by you and is not owned by you. The HRA benefit can be claimed only for the period during which rent is actually paid, and not for the entire year. Accordingly, you can claim HRA exemption for the rent paid up to September 2025 for the accommodation occupied by you.

For claiming a deduction on home loan interest under Section 24(b), you must be paying interest on a loan taken to purchase a property that is owned by you and for which possession has been obtained. You are allowed to claim the interest for the entire financial year in which possession is obtained, as there is no requirement to claim interest on a proportionate basis. Even if possession is taken on the last day of the financial year, interest for the full year can be claimed.

Interest paid for the period prior to obtaining possession (pre-construction or pre-possession interest) can be claimed in five equal annual instalments, beginning from the year in which possession is obtained.

Please note that tax benefits for HRA and interest on a self-occupied house property are available only if you opt for the old tax regime. The amount of interest deduction available will depend on whether the property is self-occupied or let out, and on the tax regime chosen for the year.

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 decision.

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