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Home loan query

Ritesh (aaa) (24 Points)

07 May 2012

Hi,

I had bought a property on home loan in Jan-09; now I want to sell this property and invest the proceed in buying another property for which i will be taking addtional home loan. Please let me know, the tax implication of the same and the relevant literature where i can find this in detail.

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5 Replies

Tejas Jain (Chartered Accountant) (314 Points)
Replied 07 May 2012

read section 54 of Income tax Act, 1961

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Regit (CA.Final) (320 Points)
Replied 08 May 2012

Mr.Ritesh, this cannot be explained in simple way right here. Better you go through Sec.54 in Capital gains or ask someone orally.

Mihir Doshi (B.Com, CA, CS, LLB) (2187 Points)
Replied 08 May 2012

First of all you must clarify whether your first property was purchased for getting any Capital Gain Exemption...that means did you sell any property before buying any property in Jan 09

Mihir Doshi (B.Com, CA, CS, LLB) (2187 Points)
Replied 08 May 2012

Also there are very simple rule. Section 54 is for Capital Gain and not related to availment of Home loan.

So you can sell your property and close down your loan.

Compute your Capital Gain from sell of your first property that you need to use in buying in another property. As your property is more than 3 years old, your gain will be long term and you will get the Indexation benefit.

On purchase of new property, you can again take the home loan for any balance amount.

Thanks

Mihir Doshi

Nekha Sapna (Manager) (21 Points)
Replied 14 May 2012

Originally posted by : Ritesh

Hi,

I had bought a property on home loan in Jan-09; now I want to sell this property and invest the proceed in buying another property for which i will be taking addtional home loan. Please let me know, the tax implication of the same and the relevant literature where i can find this in detail.

Have you paid your home loan fully or how many years remaining to pay? I'm not if there is a law which allows you to sell your home even before completing the loan payment(the ownership is still in transferring process). But, I may be wrong. Just a opinion. And your question made me to think about this plan 'taking home loan and buying a home. Half way down the emi, sell the home for higher value. Close the loan and buy a new home.' :)