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Can long term capital gain from property sale be used to pay off home loan?

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sachin

Others

79 Points Posted on 24 April 2024

Hello,

I have two questions:

1) Can long term capital gain arising out of property sale be used to pay off home loan? - Details and background: I am planning to book a new property by taking home loan of 30% of new property value. Side by side I have an old property which is on sale, once sold can long term capital gain from old property be used to pay off home loan taken for new property booking?

2) Can long term capital gain arising out of sale of two properties + sale of shares/stocks be adjusted against 1 single new property purchase? - In short how many types of long team capital gains arising out of properties, shares and any other investment be adjusted against one property? Is there a rule on that from IT?

Thank you!

Replies (7)

Quick Summary

This discussion explores whether long-term capital gains from selling a property can be used to repay a home loan taken out for a new property. It also addresses whether capital gains from the sale of multiple properties and shares can be combined to offset the cost of a single new property purchase. The consensus is that these gains can indeed be used, with specific exemptions under Sections 54 and 54F of the Income Tax Act potentially allowing for combined claims, provided certain conditions related to timing and sale consideration are met.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

212529 Points Posted on 04 May 2024

1. Possible, if the earlier property sold within one year of purchase of new property.

2. Yes allowed, exemption u/s. 54 & sec. 54f of IT act can be combined in single property purchased.

sachin

Others

79 Points Posted on 04 May 2024

Thank you sir for your response. Regarding question 2 let me be more specific: 1st property 50 lakhs + 2nd property 1.3 Cr + 30 lakhs from shares = purchase 1 single property - can you please confirm if that is possible.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

212529 Points Posted on 04 May 2024

If the purchased property is for 1.3 Crs; and if all the transactions are relevant to same assessment year, then yes it will be possible to take exemption in both.

But for sec. 54F exemption total sale consideration would be considered for exemption and not just LTCG.