tax on long term capital gain on property

This query is : Resolved

Namisha (Querist)
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26 February 2014 Hello,

My uncle sold his property which was 20yrs old. Now with that long term gain he wants to use half of the money to repay the housing loan of his son, Now if he do so, does any tax liability arises as he is using the gain money for repayment of loan of another property.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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28 February 2014 In fact you should have given the facts and figures as whether there arises any capital gain or not is based on calculation. since you have sated that the property was purchased 20 years back then it must have been purchased some times in the year 1994. So you take the purchase value in 1994 and divide it by the cost index of 1994 and multiply by the cost index of 2014 to find out the index cost of the property from which the sale value is to be deducted to find out the capital gains. If there is no capital gains then if repayment is done then there is no problem otherwise you have to pay the capital gain tax and then you can utilise the balance for repayment