Do you need to forego HRA exemption to assert curiosity deduction on residence mortgage?
I’m presently working with an organization in Chennai and dwell in a rented home in opposition to which I declare a tax exemption from the House Rent Allowance (HRA) in my wage. I need to purchase a home in my hometown in Telangana the place my dad and mom can dwell and I additionally intend to maneuver again in a number of years.
Can I get any tax advantages for buy of a home even when I don’t dwell there? If sure, will I’ve to forego the exemption advantage of HRA which I’m presently getting?
– Name withheld on request
A common confusion amongst salaried folks is whether or not they must forego the exemption advantage of House Rent Allowance (HRA) acquired from their employer to assert a deduction of curiosity on their residence mortgage.
Since you’re presently claiming the tax exemption for HRA, you could have opted for the outdated tax regime.
When a taxpayer owns a home property in respect of which he providers a house mortgage however resides in a special metropolis owing to work or every other justifiable purpose, he could also be entitled to assert the next advantages in Income Tax underneath the outdated tax regime:
i) Tax exemption foundation part 10(13A) of Income Tax Tact for lease paid in opposition to HRA acquired from his employer
ii) Deduction from taxable earnings (as much as ₹2 lakh a 12 months) underneath part 24(b) of the Income Tax Act for curiosity paid on the house mortgage of the owned property
iii) Deduction from taxable earnings (as much as ₹1.5 lakh a 12 months) underneath part 80C of the Income Tax Act for principal reimbursement of the house mortgage for the owned property
However, not one of the above advantages is offered if an individual has opted for the brand new tax regime launched within the monetary 12 months 2020-21.
(Query answered by Amit Bhachawat, CFO, India Mortgage Guarantee Corp. If you may have any private finance queries, write to mintmoney@livemint.com to get them answered by specialists.)
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