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can i aviled exemtion sec 54 by housing loan repayment

Pratham Singh Lodhi (45 Points)

12 December 2018

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Nivedita (SME - Finance) (758 Points)
Replied 12 December 2018

Exemption under Section 54 When an individual sells a residential property and buys another residential property, he will be eligible for exemption under Section 54. Conditions to avail the benefit of exemption under Section 54 includes: The taxpayer (ie. seller) needs to be an individual or HUF. Thus, firms, LLP’s and companies cannot utilize the benefits of this section. Asset needs to be classified as a long-term capital asset. The asset sold is a Residential House. Income from such a house should be chargeable as Income from House Property The seller should purchase a residential house either 1 year before the date of sale/transfer or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller has an extended time, ie. the seller will have to construct the residential house within 3 years from the date of sale/transfer. In case of compulsory acquisition, the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional compensation) The new residential house should be in India. The seller cannot buy or purchase a residential house abroad and claim the exemption. The above conditions are cumulative. Hence, even if one condition is not fulfilled, then the seller cannot avail the benefit of the exemption under Section 54.

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Nivedita (SME - Finance) (758 Points)
Replied 12 December 2018

However Sec 24 benefit can be availed- Homeowners can claim a deduction of up to Rs. 2 lakhs (Rs. 1.5 lakhs, if you are filing returns for FY 2013-14) on their home loan interest, if the owner or his family reside in the house property. The same treatment applies when the house is vacant. If you have rented out the property, the entire interest on the home loan is allowed as a deduction. However, your deduction on interest is limited to Rs. 30,000 instead of Rs 2 lakhs if both the following conditions stand satisfied: a. The loan is taken on or after 1 April 1999 b. The purchase or construction is not completed within 5 years from the end of the FY in which loan was availed