Tax liability

Hi

Yes, you can claim the exemption.

I assume that you did not get the possession of new property before 1 year of sale of the old property. Also, the property purchased was a completed project.

Yes, you can pay back the home loan and save capital gain taxes.

Please feel free to call/ revert in case you need more clarity.

In this case when capital gain comes out to 71.5 lakhs, you can pay 71.5 lakhs for home loan and claim the exemption.

You are entitled to claim exemption u/s 54 of the Income Tax Act in respect of Long Term Capital Gains (LTCG) invested in the acquisition of a new residential house, subject to compliance of the conditions specified therein.

You are also entitled to utilise the LTCG for the repayment of housing loan taken for the purchase of a residential house, in respect of which you are claiming exemption u/s 54, provided you are otherwise entitled to such exemption by complying with other conditions specified therein.

Yes, of course you can do so. My earlier answer was based on the assumption that you want to pay home loan first.

It is irrelevant whether you have made the investment through the sale proceeds or any other means. The exemption shall be available even if you don't pay the home loan.

The criteria fot exemption is investment to be made.

In aggregate, you need to invest the amount equal to the value of capital gain.

Hi,

As per the Income-tax Act, 1961, capital gain will be exempt if you invest an amount higher than the capital gain in the new property. You need not actually repay the home loan to claim the benefit of section 54 of the Income-tax Act, 1961. So long as you have purchased a new property for an amount higher than the capital gain, it is sufficient. I am assuming that you sold a residential property along with land.

Coming to calculation of capital gains, the indexed cost of acquisition will be reduced from the sale consideration. The value of the property as on 1 April 2001 will be your cost of acquisition.

Trust this clarifies.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Hello,

Yes, you can adjust the proceeds of your capital gain against the purchase value of your new flat. It is not necessary to repay your home loan with this money. It is solely up to you if you want to reduce your liability, you may prepay your loan.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP

Repayment of loan in the last one year is important. You need not necessarily invest the sale proceeds for the repayment of loan directly. Thus, to the extent of repayment of housing loan upto one year prior to the date from your regular sources, the sale proceeds may be utilised by you for other purposes.