I got possession of my house in June 2023 and moved in on December 1, 2023. Can I claim HRA benefit for rented house till November and tax benefit for the same financial year? What about interest paid till I got possession of the house?
Reply by Balwant Jain, a tax and investment expert
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There is no restriction on claiming simultaneous tax benefit for HRA and home loan for the same year provided you satisfy the conditions prescribed under tax laws.
For claiming HRA benefit you should actually be paying rent for the residential accommodation occupied by you and which is not owned by you. HRA benefit is calculated for the period for which the rent is actually paid and not for the year as a whole. So, you will be able to claim HRA benefit till you pay the rent for the rented house.
Likewise, for claiming interest under Section 24(b) you need to be paying interest on money borrowed to buy that property which is owned by you and is in your possession. Please note that you will be able to claim the interest for whole of the year even if you have obtained possession of the house on the last day of the financial year as there is no provision for allowance of proportionate interest under Section 24(b).
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In respect of the interest paid before you got the possession, the same is allowed to be claimed in five equal instalments beginning from the year in which you take the possession. The aggregate of interest claim comprised of interest during construction period as well as for the current year is restricted to two lakh rupees in a year for self-occupied property and the excess of interest over two lakhs will have to be ignored. In case of let out property the full interest is allowed but loss under the head “Income from house property” can only be set off against other income to the extent of two lakhs in a year. The loss not so set off is allowed to be carried forward and set off against the income under the head “Income from other Sources” for next eight years. So, you will be able to claim HRA for 8 months. You will also be allowed to the interest for the year 2023-2024 and 1/5 of the aggregate interest paid till March 31, 2023 within the limit of Rs. 2 lakh as this is your self-occupied property.
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