capital gain on sale of hsg property

Mr. A sold his currect self occupied hsg property and having L.T.C.G. of Rs.10 Lacs. As per section 54 he has to invest the capital gain in buying a new house with in 2 years. Suppose He has bought a new house in 40 lacs and for that he got housing loan of Rs.35 Lacs. So his own contribution for new house is Rs.5 lacs only.

So my query is as per section 54 he has to invest the capital gain of Rs.10 Lacs. however in this case he is contributing Rs.5 Lacs only.  The confusion is whether housing loan funding would be treated as our own contribution or not?? 

Replies (4)
Originally posted by : CA.Deepak

This case law will answer all your queries. Rajesh Dhawan (ThE OnE)


Mr. A sold his currect self occupied hsg property and having L.T.C.G. of Rs.10 Lacs. As per section 54 he has to invest the capital gain in buying a new house with in 2 years. Suppose He has bought a new house in 40 lacs and for that he got housing loan of Rs.35 Lacs. So his own contribution for new house is Rs.5 lacs only.

So my query is as per section 54 he has to invest the capital gain of Rs.10 Lacs. however in this case he is contributing Rs.5 Lacs only.  The confusion is whether housing loan funding would be treated as our own contribution or not?? 

Yes, Housing loan funding would be treated as own contribution, as per Sec. 54.

 

Nowhere in Sec. 54, it is specified that the same funds to be utilised for purchasing new property, what if a person purchased property within one year before the sale, how can he use the sale proceeds at that time (while purchasing), which he received at later stage

yes... Rs. 40 lacs will be allowed as exemption

Originally posted by : Rishab
Yes, Housing loan funding would be treated as own contribution, as per Sec. 54.
 
Nowhere in Sec. 54, it is specified that the same funds to be utilised for purchasing new property, what if a person purchased property within one year before the sale, how can he use the sale proceeds at that time (while purchasing), which he received at later stage

 

Agree with above

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