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How to save long-term capital gain tax on sell of property?

Tejash (Service) (24 Points)

30 September 2008

The house were we are staying is in my grandmother’s name (alive) and owned by us for more than 30 yrs. My father is the secondary holder of the said property. We are planning to sell this property to buy a bigger house; cost of new property will definitely be more than the amount we receive by selling our existing property. The amount difference will be settled by home loan in my name. As per banking terms I have to be the primary holder of new property to obtain the home loan. The question I would like to ask is under this scenario how we can avoid paying long-term capital gain tax on the sell of our existing property?

Thanks and Regards,
Tejash.

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9 Replies

(Guest)

Dear Tejash,

To the best of my knowledge being a CA-PCC student i can advise you the following.

If you invest the proceeds of the sale of house property(income from which was earlier assessed under Income from Housing property) into a another house property then it will be totally tax free from long term capital gains. The only condition is that you have to purchase the new housing property 1 yr before or 2 yr after the sale of your old property. This exemtion is to the limit you invest the capital gain (not the entire proceeds). The capital gains rising is in chargeable in the year you sell the old housing porperty, so you have to decide it immediately, or the other option is to deposit the money in a specified account to be used in the stipulated time. The new house purchased can not be sold for 3 yrs. from the date of purchase, if you do so then the amount exempted will be added to the cost of the new house property you are selling.

I hope this will solve your problem. Or else please fell free to contact me in eternal.ankit @ gmail.com

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(Guest)

For your loan query. I think you can try talking with your banker that you will be co-owner in the newly acwuired property and you need loan for the same. If they does'nt agree then you can alternatively ask them to provide loan to your parent's name and you be the guarantor for the same. I hope bank will not have any problem in this case.

Devendra Goyal (Service) (24 Points)
Replied 02 October 2008

Dear Mr.Ankit

I want to know that if house porperty was assesed as Income under the head house propery but it is used as residential purpose then the treatment will be same or any other ?

Regards

Devendra Goyal

Devendra Goyal (Service) (24 Points)
Replied 02 October 2008

Sorry question is not assesed as Income from House property

Regards,

Devendra Goyal

(Guest)

Dear Sir,

I purchased a house in 2004 at 5 lakhs.Now i am selling it at 26Lakhs. I want around 10 lakhs for my personal use and rest will be used for buying a house which will be around 30 lakhs.(I will take home loan of 14 Lakhs for buying this house

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(Guest)

I am getting a Long term Capital gain of 20Lakhs. Out of it i need 10Lakhs for my personal use. I will utilise the remaing 10 lakhs for buying a house of 30lakhs(I will take home loan of 20Lakhs) Please tell me how much tax i have to pay to the income tax ?

(Guest)

Hello, I had purchased a flat for Rs. 6.50 lacs in 2005 and now want to sell it for which I expect to get Rs. 13 lacs, thereby giving me a profit of Rs. 6.50 lacs. I want to purchase a bungalow in my native place jointly with my brother (50-50 basis) which is costing around Rs. 12 lacs. While I would pay Rs. 6 lacs down payment, my brother would be taking Rs. 6 lacs loan. Would I get the benefit of tax exemption for long term capital gains? Will my brother have a problem getting loan since the property would be joint ownership? What are the things I should take into account before making a purchase? Would appreciate any suggestions.

Thanks & Regards

Max

Mumbai

(Guest)

The case is like this:

My father in law & mother in law both are pan holder and filing return even before FY 99-00. The mother in law source of income is tuition and father in law is govt. employee .In FY 99-00 a flat for Rs 3.46 including stamp duty of 10% was purchased in name of my mother in law. In 2003 both took house loan for Rs 15 lacs jointly for construction of house on owned plot. My father in law is repaying the loan and availing tax benefit under principal amount deduction upto Rs 1’5 lacs and towards interest payment. The flat has now been sold by my mother in law recently for amount of Rs 1000000.

Now in this scenario we want to know how we can avail benefit of long term capital gain.

First option :

In case we pay the balance House loan then do we have any liability for deduction towards long term benefit??

Second option :

If we don’t pay towards house loan and utilize the payment received for any other investment ?? .

Please advise!!!

(Guest)

I had bought a flat in 1999 for a consideration of Rs. 13 Lacs and disposed this flat in 2008 for Rs. 43 Lacs. While acquiring the flat, I was a resident Indian and from 2003 onwards, I'am a NRI. At present, being NRI and not having any income in India to report, I have not been filing tax returns since 2004.( The last one was filed in 2003 April for the financial year 2002-2003). For acquiring this flat, I had taken a bank loan and 90%of this loan was repaid from my NRE funds.

My question is, do I have to pay the LT Capital gains Tax since I have not been filing any returns at all since 2003 as I'm not a resident Indian and therefore, do I need to worry about how to save capital gains tax?

Your advice would be greatly appreciated..

Thanks in advance..