Profits of one property to loan of other

Yes. You will have to pay the capital gain tax on the sale of property. Repayment of Loan will not be eligible for the capital gain exemption.

To save, the best option is to invest in Capital Gain Bonds (REC. etc.) with a lock in period of 3 years. This should be done within 6 months from the date of sale.

Hello Amit,

You cannot claim the benefit of exemption of Long Term Capital Gain by paying of your other flat loan, unless it was purchased 1 year prior to the date of Sale. If that was the case then you can claim the benefit.

Otherwise in order to save up on taxes you have to either buy a new property or invest your Capital Gains in Capital Gain Tax Saving Bonds within a period of 6 months from the date of sale upto a maximum of Rs. 50 Lacs.

Trust this clarifies your query.

Feel free to get back/ call back for any further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB - GEN, CERT. FAFP

Hello Sir, as per provisions of the Income Tax Act you cannot claim exemption for repayment of loan in case of capital gains. Hence, it will be taxable in your hands although you repay other housing loan. For exemption, you have to either buy other property, investment in bonds or deposit it in capital gain scheme.

Dear Amit,

You can save capital gain taxes if you have purchased the another house within 1 year before the sale of house you are planning to sell. Suppose if you sell the house on 1 July 2016, in that case if you have purchased that another house on or after 2 July 2015, then you can save capital gain taxes.

If not then you should invest the amount in REC or NHAI bonds within 6 month from the date of sale. Alternatively, you can buy a new property within 2 yrs or construct a new property within 3 yrs.

Thanks and Regards

CA Abhishek Dugar

Need to check when you have purchased the other flat

Hello Amit,

if you want to avail cap gain exemption you have to purchase a house within two years or construct a house within three year.

There is another way also to save tax

You can invest within six month in Bonds of RECI or NHAI.

Dear Amit,

You can save capital gain taxes if you have purchased the another house within 1 year before the sale of house you are planning to sell. Suppose if you sell the house on 1 July 2016, in that case if you have purchased that another house on or after 2 July 2015, then you can save capital gain taxes.

If not then you should invest the amount in REC or NHAI bonds within 6 month from the date of sale. Alternatively, you can buy a new property within 2 yrs or construct a new property within 3 yrs.

Thanks and Regards

CA Abhishek Dugar