10 December 2014
Dear Experts. I planning to take a flat in Bangalore. For which builder is asking to to pay in 2 month. To meet this time line I need to take home loan from bank. I have another flat in Cheanni which I will sell by March/April 2015 and pay all my bank loan( this property is 8 yrs old) Can adjust Long term gain of Chennai Property in Bangalore, since I am taking home loan for 3-4 months, to cover time gap. Regards Chandra
10 December 2014
once u sell a property such sale consideration u need to reinvest in npurchasing or constructing new house else u need to pay capital gain tax.
10 December 2014
Long term gain can be offset to property bought within one years before sale of property or withing 2 years post selling date. I am doing in that time line only, Only in between I am taking the home loan for short term arrangement of funds.
10 December 2014
Long term gain can be offset to property bought within one years before sale of property or withing 2 years post selling date. I am doing in that time line only, Only in between I am taking the home loan for short term arrangement of funds.
Fund flow will be like this 1. I book a flat by Home loan 2. Sell chennai property within 4-5 months 3. Repay home loan in one shot within 6 months by capital gain
10 December 2014
no, in this case its indirect utilisation of capital gain to purchase property but then it dept wont allow as directly it should be purchased and not routing first loan and repaying loan.
10 December 2014
Ok got it, I can not claim the long term gain thx
If I take loan against Chennai property(not home loan) and buy the Bangalore one. Pay this loan on the day when I do sale deed for Chennai. Will that allowed for Long term gain offset.
10 December 2014
I think even if you buy first and sell later, the exemption cannot be denied to you. Since this will defeat the very purpose of the section which allows you to acquire one year before the sale. If you read sec 54 carefully, in sub section 1 there is no mention of utilisation of proceeds of sale. This concept comes only after the sale and if you have not utilised for purchase/construction, then the same to be banked in Capital gains scheme in any bank and thereafter utilised. If you have already complied with Subsection 1 i.e by buying 1 year before, then subsection 2 will not apply in you case as it specifically talks abt sale proceeds un utilised as on due date of return. You can safely buy with Home Loan. In fact you should not close the home loan as it is very tax effective now with a total potential of 3.5 lakhs deduction from income.
10 December 2014
Need some more expert comments on this. Yes section 54 says you can buy one year before. this possible by loan only. I asked my company taxation manager. He said you can not take loan for offset of LTCG.
11 December 2014
Loan is your choice. Obviously if the law allows you to buy one year before it cannot possibly be referring to the sale proceeds of the property being sold. The spirit of Sec 54 is to retain capital in the housing sector by offering an exemption in this manner. It does not matter if the purchase by own or loan funds. It is nobody's case that repayment of loan will be eligible for exemption.
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