Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Capital gain

pratik dixit (article assistant) (49 Points)

11 September 2012

I have purchased a flat 3 yrs ago...now I want to sell it..some part of loan I have taken from bank is unpaid...I have taken deduction of interest paid on loan repayment in last 3 yrs..now I want to sell the flat and frm the consideration received I want to fully repay the loan..is there any criteria in which the earlier exemption received for interest for last 3 yrs..will be added back.if I sell the flat within 3 yrs..

Reply
Follow
Share

2 Replies

Pranesh (Asst-Manager ) (25 Points)
Replied 11 September 2012

Originally posted by : pratik dixit
	I have purchased a flat 3 yrs ago...now I want to sell it..some part of loan I have taken from bank is unpaid...I have taken deduction of interest paid on loan repayment in last 3 yrs..now I want to sell the flat and frm the consideration received I want to fully repay the loan..is there any criteria in which the earlier exemption received for interest for last 3 yrs..will be added back.if I sell the flat within 3 yrs..

if you sell a house within three years of buying it, the tax benefits on the principal repayment and interest paid on the home loan are reversed. These are then included in your income when you file your tax return. Also, if a house is sold within five years of the end of the financial year in which it was purchased, all the deductions claimed under Section 80C with respect to the property are added to the taxable income in the year of sale.

Upgrade to CAclubindia Pro. Subscribe Now!

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 12 September 2012

Dear Pratik Diksh*t,

The property should not be sold before a period of 5 years. If you sell the house within a period of five years from the year in which you have started claiming home loan IT benefits, the entire deduction claimed under section 80C – for repayment of principal sum of the home loan – in earlier years will be deemed to be your income in the year in which you sell the property. However, the housing loan interest deduction claimed under section 24(b) won’t be reversed.

Regards,

RAJESH CHOUDHARY