How to claim HRA when living with parents?

Here’s how to claim HRA when living with parents. You can claim House Rent Allowance (HRA) while living with your parents in India, provided you pay them rent and follow proper documentation. HRA is part of your salary structure. You must pay rent to your parents and not own the property where you reside.

How Save Tax on HRA When Living With Parents?

The steps that needed to be followed are,

1. Draft a formal rental agreement between you and your parents, specifying the terms of the rental arrangement. The agreement should include details like rent amount, payment frequency, and property address.

2. Transfer the rent to your parents via bank transactions (NEFT, IMPS, etc.) or issue cheques to create a valid proof of payment. Avoid cash payments as they are harder to substantiate.

3. Obtain rent receipts from your parents, especially if the rent exceeds Rs. 3,000 per month.

4. If the annual rent exceeds Rs. 1,00,000, you must submit your parents’ PAN to your employer.

5. The rent received by your parents is treated as their taxable income under the heading “Income from House Property.” They can claim deductions like 30% of annual rent for maintenance or property-related expenses.

Ensure your parents declare the rental income in their tax returns. The property should not be jointly owned by you; otherwise, HRA claims may be disallowed. This is how to claim HRA when living with parents.

Read more

How to Claim HRA If Not Mentioned in Form 16 2024

Here’s how to claim HRA when living with parents. You can claim House Rent Allowance (HRA) while living with your parents in India, provided you pay them rent and follow proper documentation. HRA is part of your salary structure. You must pay rent to your parents and not own the property where you reside.

How Save Tax on HRA When Living With Parents?

The steps that needed to be followed are,

1. Draft a formal rental agreement between you and your parents, specifying the terms of the rental arrangement. The agreement should include details like rent amount, payment frequency, and property address.

2. Transfer the rent to your parents via bank transactions (NEFT, IMPS, etc.) or issue cheques to create a valid proof of payment. Avoid cash payments as they are harder to substantiate.

3. Obtain rent receipts from your parents, especially if the rent exceeds Rs. 3,000 per month.

4. If the annual rent exceeds Rs. 1,00,000, you must submit your parents’ PAN to your employer.

5. The rent received by your parents is treated as their taxable income under the heading “Income from House Property.” They can claim deductions like 30% of annual rent for maintenance or property-related expenses.

Ensure your parents declare the rental income in their tax returns. The property should not be jointly owned by you; otherwise, HRA claims may be disallowed. This is how to claim HRA when living with parents.

Read more

How to Claim HRA If Not Mentioned in Form 16 2024

House Rental Allowance or HRA is a component in salary structure of an employee for which exemption can be claimed. If you are a salaried employee living with your parents you must be wondering how to claim HRA when living with parents. Well, the question is can you actually do it? If yes, then what is the process. To help you out I am here. You can expect some solution by reading this answer.

Let us get this question out of the way first. There are several cases to consider when answering this question:

1. Living with parents in your house: Yes

2. Living in your own house (owned by you to be very specific): No (but there is a provision to claim tax deduction on home loan interest)

3. Own a house but live in a rented house: Yes (you can claim HRA and deduction on home loan interest)

I know claiming HRA may seem a tedious task especially when you don’t keep a track of payment made. Here is a guide for you to make the process a tad bit easier

• Make the regular rent payments with the proper trail to track the statements

• It is advised to make a rent agreement if the payments exceed Rs. 1 lakh per year. Get the rent receipts from your peers

After getting these two steps in sync, you just have to attach the rent payment proof while filing the ITR or to your employer (as suitable to you) and apply for the claim on HRA. 

I hope now how to claim HRA when living with parents is clear to you.