Section 54

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Vipul (Querist)

29 June 2012 I and my wife are joint owner of a flat. We are selling this flat @ 46 lacs. Indexed cost is 10.5 lacs & cost of improvement is 3 lacs. We have bought another flat for 23.5 lacs and on that we will take loan of 12 lacs. Now how much we need to invest to save maximum tax. Kindly advise. Thanks

Amol S Joglekar

Amol S Joglekar (Expert)

29 June 2012 (Assuming cost of improvement is also INDEXED.) Long terma capital gain is 46 -10.5-3.00=32.50 Exemption u/s 54 is 23.5 leaving a taxable long term capital gain of 9 lakh. Either you can take benefit of 54EC or 54.

Vipul

Vipul (Querist)

29 June 2012 What about 12 lacs loan ? Will i get full exemption of 23.5 as i have taken loan of 12 lacs. Can i invest 9 lacs in another flat ?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)

29 June 2012 You will get full exemption of Rs. 23.5 lakhs, irrespective of the fact that part of the investment has been financed by bank.

Under Section 54 exemption can be availed for investment in only one house.

Vipul

Vipul (Querist)

29 June 2012 As my wife is a co-owner, can we say that share of her ltcg is invested separately on another flat by her and can we claim exemption on balance ltcg ?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)

30 June 2012 The new house already purchased by you is in joint name?

If that is the case, then your wife has already invested in ONE house.

So she will not get deduction for investment in another house.

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