Exemption for capital gain from sale proceed utilised for repayment of house loan

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This query is : Resolved

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This discussion explores whether using the sale proceeds from an old house to repay a housing loan taken for a new house qualifies for capital gains exemption under Section 54 of the IT Act. The consensus is that direct repayment of the loan does not qualify for exemption. Instead, eligibility hinges on the timing of the new house purchase or construction relative to the sale of the old property, with specific conditions for purchase (1-2 years around sale date) and construction (within 3 years of sale date).

sunitha

sunitha (Querist)
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21 November 2024 I have an one old house and constructed a new house by taking a housing loan, if i sold the old house and the entire sale consideration was used to repay the loan taken for new house , can i claim an exemption u/s 54 of the IT Act, any decided cases

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 November 2024 No, not by repayment of loan, but check eligibility for the new house property.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 November 2024 that depends on the time gap between the purchase of new house and sale of old house.

The condition is as under:

The seller should purchase a residential house either 1 year before the date of sale/transfer or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller has an extended time, ie. the seller will have to construct the residential house within 3 years from the date of sale/transfer. I

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