Can I Pay Rent to Parents to Claim HRA?

Those who lives in a rented apartment or a property can save their tax by claiming a deduction for HRA which is also known as House Rent Allowance. HRA is one of the most common allowances received to the salaried persons. Although, many salaried persons live in their house owned by their parents but not sure about how they can claim their HRA exemption. Let’s dive into this topic to see if is it possible to claim HRA exemption by paying rent to parents.

What is HRA and its benefits?

House Rent Allowance is a yearly allowance that employers provide to their employees that help his employees with their accommodation expenses. HRA allows salaried persons to claim a tax deduction on the paid rent. The HRA amount calculated on the basis of the rent paid and the city of residence.

Can You Pay Rent to Parents to Claim HRA exemption?

Yes, you can claim the HRA exemption by paying rent to parents if you are staying with your parents. This can be done by paying rent by transferring money to their back account or paying through cheque. If both of your parents are joint owners of the, you can pay the amount to any of your parents.

Do remember, if you are owner or co-owner of the property, you can not claim the HRA exemption on the rent paid to yourself.

What Documents do I need to claim HRA Exemption?

To claim the HRA exemption, you only need Rent Agreement and Rent Receipts. You employer would ask you to submit a copy of your rent agreement as well as the rent receipts to allow you the HRA exemption.

What are the advantages of claiming HRA while staying with Parents?

There are various benefits you can avail if you claim HRA while staying with parents. Here are some of them:

• By submitting rent agreement and rent receipts, you can claim HRA and save tax.
• Your parents will be able to deduct property tax and can claim a 30% standard deduction on the rental income.
• If your parents are more than 60 years old, they can get higher income tax exemption (3 Lakh for who are 60 years old and 5 Lakh for those who 80 years old).

Can I Pay rent to my spouse to claim HRA?

Yes, if your spouse is the sole owner of the property then you can pay your rent to your spouse and claim the HRA.

Conclusion

The question of whether one can pay rent to parents to claim HRA is not a straightforward one but by paying rent to your parents, you can claim HRA and save tax. paying rent to parents for HRA claims requires adherence to tax regulations. Ensure a genuine rental agreement, regular transactions, and compliance with legal guidelines to substantiate your claim.