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Short term capital gain query

Varsha V R (Firm) (40 Points)

24 March 2018

Hi friends,

I have a query. There was an residential house property which was a short term capital asset and now its sold resulting to short term capital gain. There was a loan taken for this purpose from the bank and principal repayment was claimed as a deduction under Sec 80C and Interest repayment for such property was claimed under the head Income from House property when the asset was under there ownership. Now my query is whatever earlier (i.e before sale) we had claimed the principal repayment and Interest repayment does it gets reversed after sale, and if yes under which under which head it gets taxed.?

The above transaction relates to financial year 2016-2017.

Please help me with the solution ASAP.

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7 Replies

Divakar (Student CA Final ) (11857 Points)
Replied 24 March 2018

house property is sold within five years of the end of the financial year in which it was purchased, the tax benefits claimed go out of the window i.e. tax benefits which were claimed earlier will have to be reversed. The tax deduction claimed for the principal repayment, stamp duty and registration under Sec 80C are reversed and the amount becomes taxable in the year of sale. Only the deduction of the interest payment under Section 24B is left untouched.

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