Home loan vs HRA claim in parent’s home
Calculator – Home loan vs HRA claim in parent’s home
|Loan interest %||0.095|
|HRA ( 40% of base )||40000|
|Self Purchased||Purchase via parent|
|yearly Section 24b tax saved||60000||Payment to parents||40000|
|Total payment||8498022.1458||HRA benefit - self||9000|
|Yearly tax saved - self||108000|
|Taxable income - parents||0|
Home loan vs HRA claim in parent’s home explains if it’s financially better to take home loan on self verses letting parents pay the loan and claim HRA benefit.
Few things to note here:
1. Section 24b, which allows tax exemption up to 2 lakhs on house loan interest amount.
2. Section 80CC, which allows tax exemption on principal amount is not that useful as most of the IT employees have already reached 1.5 lakhs limit by PPF and EPF.
3. HRA keeps increasing every year which can add more tax benefit.
4. The below calculation just points out the break even point between 2 cases after which the HRA claim is more beneficial.
5. Once your HRA has crossed a certain amount, you will start getting the tax benefit and end up paying less to loan company.
Please note that the calculation is only for illustration purpose. Please check with your financial adviser before making any decision. Author or website is not responsible for any loss or legal issues that may occur due to steps taken