How to split rent for HRA
If you and your partner both get HRA and live together, at some point you have to decide who pays how much of the rent. Most people split it 50:50 and move on. That might not be the optimal split.
There are a dime a dozen HRA calculators online. Every one of them asks for your salary, your HRA and your rent, and tells you how much is exempt. None of them answered my actual question, which was how to split the rent between two people.
The split matters. Your exemption is the lowest of three numbers:
- the HRA you get
- the rent you pay minus 10% of your basic
- half your basic (40% if you’re outside a metro)
So whoever has the higher basic loses more to that 10% cut, and whoever has the lower HRA hits their cap sooner. If you put too much rent on one person, part of it does nothing. If you put too little, you leave exemption on the table.
So I built a small tool for it. You enter both your basics, both your HRAs and the rent, and it gives you the split that saves the most tax for the two of you together.
Two things to keep in mind. This only works under the old tax regime. And each of you has to actually pay your share, so send it from your own account so there’s a record.