I stay in City-A and I have bought a house in City-B which is under construction. I had taken a loan for buying the house but I do not get tax exemption on the Interest component of the loan repayment as I have not yet got possession of the house.

Now, I am buying a house in City-A (by taking another loan) and will get possession immediately. In this case, will I get tax exemption on the interest component (upto the prescribed limit) of the loan repayment EMI? Secondly, if this new house is put on rent while I continue to stay on another rented facility in the same city – will there be any implication for obtaining HRA benefit from my employer? Of course, I understand that the rent obtained will become a part of my taxable income (in addition to other income such as Salary I have).

Admin’s Response:

Yes, you would be entitled for tax exemption on the interest component. There would be no implication on your obtaining HRA benefit from your employer as the same is governed separately under the Act. You will be in an advantageous position as far as the rent income is concerned, since you can claim full interest on housing loan against your rental income without any limit.