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Treatment of loan already existing on the purchased property

27 November 2014

Hello,

Purchase a property on which loan was already existing. As per the agreement of sale the outstanding loan was repaid by the transferor, how this repaid loan will be shown in the books of transferor. Whether it will be included in cost of property or will be claim under house property?

Thanks in advance.

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Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 28 November 2014

When you had created the liability for the loan taken for purchase of the property that much amt was payable to the finance co. Now transferor has repaid this outstanding loan so it won't have any effect on the sale of property. However the interest paid on the loan can be capitalized and considered as COA.

Can you plese elaborate your questino more clearly. Whether it is SO property or it is bieng rented for comercial/residential purpose.

Between whom the agmt to sale is being made.