Paying rent for yourself and parents? Know if you can claim HRA for more than one property

HRA tax exemption is available only under the old tax regime and applies to rent paid for the residential home an employee actually occupies. Here's whether you can claim HRA for two properties.

House rent allowance (HRA) can be a key tax-saving component of the salary for many salaried employees. However, tax exemption on this allowance is available only under the old tax regime, meaning employees who opt for the new tax regime must pay tax on the entire HRA received as part of their salary.

Since this salary component is intended to help employees meet their rental expenses in a city where they are employed, paying rent for multiple properties, such as a home near the workplace and another for parents living in a different city, can complicate HRA claims.

Can you claim HRA for a house you don't live in?

HRA exemption is allowed under Section 10(13A) of the Income-tax Act, subject to certain conditions. One of the key requirements is that the allowance must be specifically granted by the employer to meet the employee's actual rental expenses for residential accommodation occupied by them.

“House Rent Allowance is paid by the employers to the employees to meet the cost of rented house taken by them. The Income-tax law allows exemption up to certain extent in respect of the HRA if employee pays rent for the house which he actually occupies,” according to the income tax department's website.

Accordingly, house rent allowance tax exemption can be claimed only for the rented residential accommodation that the employee occupies. If you pay rent for your own home as well as a separate property where your parents live, you cannot claim HRA exemption on the rent paid for that second accommodation, even if you bear that expense yourself.