Long term capital gain

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Avinash (Querist)
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30 August 2012 Greeting to all,

CASE-Rs. 10Lac is logn term capital gain from selling of residential flat & purchased another flat for Rs.12Lacs within 2years. I have given 2Lacs to builder thru cheque & for 8 Lacs taken loan from bank

My question is
whether capital gain of 10Lac would be exempted bcz I have utilised only Rs.2Lacs for pur. of property balance amount has been financed.

Thanking You,
Aviansh

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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31 August 2012 As it stands, you have only applied Rs.2lacs out of the total Rs.10Lacs LTCG in buying a new residential property and you have financed the new house from a bank loan.
In this case, the balance Capital gains(Rs.8lacs) will be taxable.

You can avoid paying the tax by investing the balance in Capital gains deposit scheme and then use such funds either

1. to construct/purchase another property within the specified time period;

2. to invest in capital gains savings bonds if you have transferred your residential flat only recently (note:you cannot invest in these bonds 6months after the date of transfer)

3. to prepay the loan taken on your new house property