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

Tax queries 450 views 7 replies

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)

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.

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.

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.

Thank you sir. The new property value is higher than combined value of 2 old properties (50 L+ 1.3Cr) + shares.

Yes, you can claim exemptions u/s. 54 & sec. 54F of IT act simultaneously.

Thank you sir for clarification, appreciated.

You are welcome.. 


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