Long term capital gains

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Nidhish (Querist)
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13 August 2012 I had purchased a plot in 2006 and had sold it in Dec 2010. The capital gains on the same were put into a Capital gains account. At the same time, I have booked an apartment and have taken a loan for the same. The flat is due for possession in Apr 2013. Can I repay my housing loan from the capital gains in the Capital gains account?

CA VISHNU GAVKARE

CA VISHNU GAVKARE (Expert)
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13 August 2012 Dear Nidhish,
My 1 question to you is if you had deposited money in capital gain account then why did not you utilise it for the purpose of acquiring the house? Why you took loan keeping your own money in bank account?

ca binny

ca binny (Expert)
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14 August 2012 Dear Vishnu,

It may happen at times that the amount of capital gains is not so enough to meet the sales consideration of the new property so the person may take a loan and then think to repay (not fully) the loan using the capital gains amount. Moreover, the Act says that the amount should be utilised to purchase another property, may it be on loan or not.

Nidhish

Nidhish (Querist)
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14 August 2012 Dear Vishnu, To tell you frankly, I was not aware of the rules. When told to deposit the amount into Capital Gains account, did the same without realizing that it is not easy to take it out. The apartment purchased was of a higher value. Have taken a partial loan for the same. Paid the balance from savings. Now want to prepay the loan.

CA VISHNU GAVKARE

CA VISHNU GAVKARE (Expert)
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14 August 2012 Dear Nidhish,
It is always advisable to pay the money from balance deposited in capital gain account and balance to be paid from loan or any other source. In this case according to me you can utilise the money for repayment of loan as the main purpose is to purchase the asset. But portion towards principal only will be considered. Further you can not claim benefit of the same under sec 80c (Principal repayment of housing loan).

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