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Capital gains on flat bought on loan

15 December 2017

1. Whether loan interest can be capitalised and whether the same can be added to cost of acquisition

2. if the flat is held for 2 years being long term whether the indexation for interest paid over the tenure needs to be worked out basis the date payment

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3 Replies

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 15 December 2017

if the loan is obtained for business purpose or self residence/ letout, you will claim interest expenses under 36(1)(iii) or 24(b). so if you capitalise then you ll claim depreciation on that... you can't claim deductions for same amount under two different sections.. this is my opinion

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Arun (student ) (112 Points)
Replied 16 December 2017

thank u sir for making me revise the provision once again
since you bought the flat for self occupancy / let out purpose
there is no question of indexation as it is held for for less than 36 months.
if u held the asset for less than 36 months resulting gain would be STCG
If the period of holding is more than 36 months it would be LTCG
INTEREST ON LOAN is deductible u/s 24(b)

Divakar agarwal (Student) (247 Points)
Replied 17 December 2017

Dear arun there is amandment in Finance act 2017 regarding period of holding for immovable property which is reduced to 24 months thus if property is held for less than 24 months the resulting gain will be stcg