Many salaried individuals often wonder whether they can claim House Rent Allowance (HRA) and home loan interest deductions simultaneously under the Income Tax Act. The confusion arises when someone lives in a rented accommodation but also owns a property purchased through a home loan. Tax experts have clarified how both benefits can be claimed under certain conditions — but only under the old tax regime.

Understanding Section 24(B) of the Income Tax Act

According to tax experts, Section 24(B) of the Income Tax Act allows a taxpayer to claim a deduction on the interest paid on a home loan. This deduction applies when the property is used for self-occupation.

If you live in your own house and have taken a home loan for it, you can claim a deduction of up to ₹2 lakh per financial year on the interest paid towards the loan. This benefit is available only under the old tax regime and helps reduce your overall taxable income.

When the Property Is Rented Out

If you purchase a home through a loan and decide to rent it out, you can still claim the deduction under Section 24(B). In such cases, the interest paid on the home loan can be deducted from the rental income earned from the property.

However, there’s a limit. The total loss that can be set off under the head ‘Income from House Property’ against other income sources is capped at ₹2 lakh per year. If the loss exceeds this limit, the remaining amount can be carried forward for up to eight assessment years, to be adjusted against future income from the same property.

Again, this benefit is only available under the old tax regime. Under the new tax regime, taxpayers cannot claim such deductions or set off property losses against other income.

HRA and Home Loan Deductions Together

If you are living in a rented house and paying rent while also owning another property that you have rented out, you can claim both benefits — HRA exemption and home loan interest deduction — together.

Here’s how:

• You can claim HRA exemption on the rent you pay for your current residence.

• At the same time, you can claim home loan interest deduction under Section 24(B) for the property you have rented out.

There is no restriction in the Income Tax Act that prevents a taxpayer from availing both benefits simultaneously, as long as the conditions for each are met.

However, this is possible only under the old tax regime. In the new regime, HRA and most other deductions are not available.

Conditions for Claiming Home Loan Tax Benefits

Tax experts explain that the eligibility for claiming home loan benefits does not depend on whether it is your first or second property. What matters is how the property is used:

• If it is self-occupied, you can claim up to ₹2 lakh on interest payments.

• If it is rented out, you can claim a deduction for the full interest paid, but the total loss set off against other income is capped at ₹2 lakh annually.

If you are under the new tax regime, you cannot claim any deduction for interest on a self-occupied house. For rented properties, the deduction is allowed only up to the amount of taxable rent, since property-related losses cannot be set off against other income.

HRA Benefit Only Under Old Regime

When it comes to HRA exemption, you can claim it as long as you are paying rent for your accommodation, even if you own another property. The key is that the property you own should not be used for your residence — it can be rented out.

But do note that HRA deduction is permitted only under the old tax regime. So, taxpayers who have opted for the new regime will lose both HRA and home loan interest benefits.

Bottom Line

You can claim both HRA exemption and home loan interest deduction together — but only if you are under the old tax regime and meet the required conditions. If you’ve switched to the new regime, these benefits are not available.

Tax professionals recommend carefully comparing both regimes before filing returns, as the choice can significantly impact your overall tax savings.