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Ltcg and repayment of housing loan

Naveen Kumar Jain (Chartered Accountant) (640 Points)

08 July 2012

A has sold an inherited residential property and has a LTCG of Rs 50 lakhs. A has another property acquired 2 years ago on which there is an outstanding housing loan of Rs 40 lakhs. A utilises the LTCG in repayment of this outstanding loan. Can A get exemption in paying tax on LTCG to the extent of repayment of housing loan? If so, under what section, please advise.Kindly quote any case law on this topic if possible

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2 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 09 July 2012

Sir, As per Section 54 exemption on LTCG can be claimed only if the house property is purchased one year before the transfer took place.

In your case the another property is purchased 2 years ago before selling the inherited residential property. So I think that the exemption can't be claimed.

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CA Gaurav Choradia (Relationship Manager ) (418 Points)
Replied 09 July 2012

Mr Girdhar is right. No exemption is available for payment of loan for property acquired 2 year earlier than sale of original property which has been sold.