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Deduction and capital gain

Rajat jain (student) (167 Points)

29 August 2019

I sale my house in December 2018. on that house I have loan so can while calculating capital gain can I claim interest deduction u/s 24(b)
and principal amount deduction under section 80C .

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Kapadia Pravin (17249 Points)
Replied 29 August 2019

if period of holding of the house is less than 5 years then 80C allowed in earlier years will be nullified and it will be taxed in the year of sale.

Also if period of holding is less than 2 years, then gain will be treated as STCG

Interest deduction under 24(b) allowed in earlier years will remain untouched

Rajat jain (student) (167 Points)
Replied 29 August 2019

period of holding house is more than 5 year

Suresh Thiyagarajan (Student) (3986 Points)
Replied 30 August 2019

1. Capital gains computations do not allow to claim interest deductions as per sec 48. If you don’t have a house there cannot be interest deductions and deductions u/s 80C.
2. This is for a simple reason that your house still has unpaid loans standing in your name, that means banks have a charge on your house for repayment of the loan. In this case selling of house, the property cannot be done unless loan is fully repaid.
3. However, if the buyer decides to repay the loan, the same should be entered into an agreement with the consent of bank and only then agreement of sale will be valid. This is a very unlikely scenario.
4. Even if the whole amount of principal and interest is paid before the sale takes place, the same cannot be claimed as deductions while computing HP income as there is no income chargeable to tax during the year. Same goes to sec 80C.
5. To answer your question sec 80C and sec 24(b) cannot be claimed as deductions while computing Capital Gains.
Please correct me if the above interpretation has an alternative view.

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