Income Tax

Can You Claim Both HRA and Home Loan Interest Deduction?

CA Nikhil Gupta·June 2026·6 min readIncome Tax

Reviewed by CA Nikhil Gupta · Last reviewed 17 June 2026

It sounds almost too good to be true: claiming a tax deduction for the rent you pay AND for the home loan on a house you own. But it's perfectly legal in a common scenario - when work takes you to a different city than where your own home is.

The Short Answer: Yes, in the Right Circumstances

There is no rule in the Income Tax Act that prohibits claiming both HRA exemption (Section 10(13A)) for rent paid and home loan interest deduction (Section 24(b)) for a self-owned property, provided the two relate to genuinely different situations - most commonly, owning a house in one city while working and renting in another.

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The Most Common Scenario

Why This is Allowed

Benefit	Section	What it Requires
HRA Exemption	10(13A)	You pay rent for accommodation where you actually reside (for employment or other reasons), and you receive HRA as part of salary
Home Loan Interest Deduction	24(b)	You (or jointly) own a residential property on which you've taken a home loan and are paying interest, regardless of whether you live in it

These two provisions test entirely different things - one is about your actual residence and rent payment, the other is about ownership and loan interest on a property. There's no requirement that the rented house and the owned house be the same, or even in the same city.

What If You Own a House in the Same City Where You Work?

This is where it gets tricky. If you own a house in the same city where you work and live, but choose to rent a different house instead (say, because your own house is far from your office, or under renovation, or occupied by family), tax authorities may scrutinize the HRA claim more closely. The key question becomes: is there a genuine, bona fide reason for renting separately rather than living in your own house? If the arrangement appears to be purely for tax avoidance (e.g., paying 'rent' to a family member for a house you could easily live in), it may be challenged.

Important caveat - new tax regime: Both HRA exemption (10(13A)) and home loan interest deduction on self-occupied property (24(b)) are not available under the new tax regime (Section 115BAC). This dual-claim strategy is only relevant if you've opted for the old tax regime. If the property is let-out (not self-occupied), interest deduction against rental income remains available even in the new regime, since it's a deduction against that specific income source rather than a standalone exemption.

Documentation You'll Need

For HRA: Rent receipts, rental agreement, landlord's PAN (if annual rent exceeds Rs 1 lakh), and proof of rent payment (bank transfers preferred over cash)
For home loan interest: Interest certificate from the lender (Form 16A-equivalent for home loans), loan sanction letter, and property ownership documents
Declaration to employer: Submit Form 12BB to your employer declaring both the rent paid (for HRA) and the home loan interest (for TDS adjustment on salary)

What If the Owned House is Let Out (Rented to Someone Else)?

If you own a house in another city and have rented it out to a tenant (rather than keeping it vacant or for family use), while you yourself rent accommodation in your work city:

You report rental income received from your owned property under 'Income from House Property'
You claim the full home loan interest (no Rs 2 lakh cap for let-out property, though overall house property loss set-off against other income is capped at Rs 2 lakh per year, with excess carried forward)
You separately claim HRA exemption for the rent you pay in your work city

This is a completely standard and common scenario - particularly for employees who relocate for work but retain and rent out a property purchased in their hometown.

Frequently Asked Questions

Can I claim HRA exemption and home loan interest deduction for properties in different cities? ▼

Yes. If you own a home (with a home loan) in one city and rent accommodation in another city for work purposes, you can claim HRA exemption under Section 10(13A) for the rent paid, and home loan interest deduction under Section 24(b) for the owned property - both under the old tax regime.

Can I claim both if I own and rent a house in the same city? ▼

It's possible but invites more scrutiny. Tax authorities look for a bona fide reason for renting separately when you own a house in the same city - if the arrangement looks like it's purely for tax avoidance (e.g., paying rent to a relative for a house you could occupy), the HRA claim could be challenged.

Does this dual-claim strategy work under the new tax regime? ▼

No. Both HRA exemption (10(13A)) and home loan interest deduction on a self-occupied property (24(b)) are not available under the new tax regime (Section 115BAC). This strategy only applies if you've opted for the old tax regime. However, if the owned property is let out, interest deduction against the rental income remains available even under the new regime.

Source and review trail

Use the current official instrument, portal or regulator publication before acting.

Primary category: Income Tax
Official starting point: www.incometax.gov.in

Primary sources & related provisions

Statutory provisions referenced in this guide: