Capital gain

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This query is : Resolved

SOMASHEKAR (Querist)

01 June 2019 A residential vacant site was purchased by Mr. Raghu and sale deed was registered in his name on June 2017 (property value is Rs. 30,00,000/) and constructed residential single house taking housing loan of Rs. 20,00,000/- in the same site and now he is willing to sell the same property in July 2019 for 60Lakhs due to some personal reasons.
Clarification required:
1. Will this be considered at STCG or LTCG for Mr. Raghu ?
2. Can he invest that amount for purchasing a residential flat in apartment ?
3. Can he close the housing loan which was taken to construct the same house after selling the property?
4. He is having another a Site purchase loan in which a site was purchased in the year nov 2016. Can he close this loan also?

Pls suggest how he can invest to avoid property tax on capital gain?

Amol S Joglekar

Amol S Joglekar (Expert)

01 June 2019 01. short term. 02. He can very well invest the amount in buying new flat. 03. Mostly the loan is given by mortgaging the property. Assuming the same property is mortgaged, the banks will NOT let him sell the property unless he repays the loan. So to say, he HAS to repay the loan. 04. He can repay the other loan also.

SOMASHEKAR

SOMASHEKAR (Querist)

01 June 2019 Thanks a lot for the suggestion Sir.
1. If it is considered as short term then will he be attracted to the capital gain tax.?
2. If he is clearing all the loan and purchasing a flat by investing all the amount he got from selling the property, will he be attracted to Capital gain tax.?
3. if he wants to claim rebate under LTCG, what should be done.? pls suggest.

Amol S Joglekar

Amol S Joglekar (Expert)

01 June 2019 01. Yes. He has to add the short term capital gain in his income and tax to be computed slab rate wise.
02. Repaying loan has no bearing on capital gain
03. For Long Term Capital Gain, he has to sell the property after completion of 24 months from the date of completion of the residential unit.

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