Claiming HRA for Jointly Owned Properties

How do I claim house rent allowance (HRA) for jointly owned properties?

Introduction

Jointly owned properties can present unique challenges when it comes to claiming House Rent Allowance (HRA). Unlike single-owned properties, the process of claiming HRA for a jointly owned property involves the division of rent amounts among multiple owners. This article will provide a comprehensive overview of jointly owned properties, explaining the concept and detailing the steps involved in claiming HRA for such properties.

What is HRA (House Rent Allowance)?

HRA is an abbreviation for House Rent Allowance. The employer pays its employees House Rent Allowance (HRA), a portion of their salary, to cover the cost of rented housing. Section 10 of the Income Tax Act, 1961 exempts the HRA from taxation, and either a partial or complete exemption may be requested. The most recent HRA calculator can be used to determine whether an HRA is taxed or exempt. It is determined by a person’s salary. Additional variables such as dearness allowance, commission received, and city of residence all have an impact on the calculation.

What is a Jointly owned property?

A jointly owned property is a property that is owned by two or more people. These owners can be family members, friends, or business partners. When it comes to claiming HRA for a jointly owned property, the rent amount needs to be divided between the owners.

Claiming HRA for Jointly Owned Property

People living in jointly owned properties can claim HRA. However, the process of claiming HRA for a jointly owned property is slightly different from claiming HRA for a single-owned property. When you live in a jointly owned property, the rent amount needs to be divided between the owners, and the amount of rent paid by the tenant needs to be allocated to each owner according to their share.

How do I claim HRA for jointly owned properties?

To claim HRA for jointly owned property, you need to follow the steps mentioned below:

Step 1: Draft a Rent Agreement

The first step is to draft a rent agreement between the owners. The rent agreement should clearly state the share of the rent each owner is entitled to. It should also mention the mode of payment and the due date of payment. This document is mandatory for the process of claiming HRA for joined properties.

Step 2: Get Rent Receipts

To claim HRA, you need to provide rent receipts as proof of payment. Each owner should issue rent receipts to the tenant for the share of the rent they have received. These rent receipts should be in the name of the tenant and should clearly mention the amount of rent paid, the duration of the rent, the name of the owner, and their share of the rent. This document is mandatory for the claim of HRA for joint properties.

Step 3: Calculate your HRA

To calculate your HRA, you need to consider the rent you have paid during the financial year, the HRA provided by your employer, and the city you are living in. The HRA exemption is the minimum of the following:

Actual HRA received from the employer
Rent paid minus 10% of the basic salary
50% of the basic salary if you are living in a metro city, or 40% of the basic salary if you are living in a non-metro city.

Step 4: Submit Rent Receipts and Rent Agreement

To claim HRA, you need to submit rent receipts and a rent agreement to your employer. The rent receipts should be in the name of the tenant and should clearly mention the name of the owner and their share of the rent. The rent agreement should clearly state the share of rent each owner is entitled to. This document is mandatory for the claim of House Rent Allowance for properties.

Conclusion

In conclusion, claiming HRA for jointly owned properties can be a bit complicated, but it is not impossible. To claim HRA, you need to draft a rent agreement, get rent receipts, calculate your HRA, and submit the rent receipts and the rent agreement to your employer. Make sure you keep all the necessary documents and follow the rules to claim HRA successfully. Remember, the rent agreement and rent receipts are mandatory for the claim of House Rent Allowance for joint properties.