Capital Gains Tax Savings

HI Sir,

I need very urgent advice. Background
1. I own a flat jointly with my wife which is where we reside.
2. I bought another flat in joint name with my wife for which the registration of the sale deed happend in Nov 2009 but the posession was recieved in May 2010 once the building got the Occupation certificate from BMC. We have jointly taken a loan for the purchase of this flat.
3. I Sold a plot of land whose sale deed transfer took place in Dec 2010. This plot was bought in Sept 2005. So I accrued a LTCG.

My questions are

1. Can I repay the loan for the second flat using the sales proceed of the plot?
2. Can I buy a new residential property to save on LTCG tax?
3. Which is the best way to save LTCG tax?

Replies (4)

no tax implications of using sale proceeds to repay the loan

but u can not save tax by purchasing a new house -as sec54 is  applicable for sale of " house" and not "plot of land" & sec54F is also not applicable on u as more than one house are owned by u on tha date of sale of plot

u can save tax by investing in 5-year bonds of REC or NHAI within six months of sale of plot subject to ceiling of RS 50,00,000

Hi,

Thanks for the response. But I still have some concerns

Shouldn't the possession date of the second flat be considered as the date of possessing two flats instead of the date of registration as the flat was not ready then. It was merely booking the flat and registtering the docuemtns.

If the possession date is considered as the key date then this will fall within one year of the sale of the plot and hence I can save LTCG by repaying the loan for the second flat. PL advise.

Thanks

 

Originally posted by : Ajay


HI Sir,

I need very urgent advice. Background
1. I own a flat jointly with my wife which is where we reside.
2. I bought another flat in joint name with my wife for which the registration of the sale deed happend in Nov 2009 but the posession was recieved in May 2010 once the building got the Occupation certificate from BMC. We have jointly taken a loan for the purchase of this flat.
3. I Sold a plot of land whose sale deed transfer took place in Dec 2010. This plot was bought in Sept 2005. So I accrued a LTCG.

My questions are

1. Can I repay the loan for the second flat using the sales proceed of the plot?

- after capital gain tax u r set free to use the funds as per your wish.


2. Can I buy a new residential property to save on LTCG tax?

- nice idea to save cap gain tax.

3. Which is the best way to save LTCG tax?

- your choice 2 or invest in capgain deposit scheme. 

Originally posted by : Ajay


Hi,

Thanks for the response. But I still have some concerns

Shouldn't the possession date of the second flat be considered as the date of possessing two flats instead of the date of registration as the flat was not ready then. It was merely booking the flat and registtering the docuemtns.

- owing "more than one" means disqualification, except specific conditional exemption. 

If the possession date is considered as the key date then this will fall within one year of the sale of the plot and hence I can save LTCG by repaying the loan for the second flat. PL advise.

- paying loans from capital gains does not qualify for cap gain scheme. hence cap gain taxes applicable. 

Thanks

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