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Sale of house - for loss

chandu (Consultant) (28 Points)

29 February 2012

Hi,

I bought a House (re-sale) on July-2007 in Hyderabad for 65 Lakhs in which 62.5 Lakhs in Loan from LICHFL. I am availing Tax Exemptions for Principal and Interest since Aug 2007 - Till Date. Now, I sought to Sale the HOUSE for gripping LOSS of 60 Lakhs in which (53.5 Lakhs in LICHFL O/S which will be paid by the BUYER). So In-Hand I get 6.5 Lakhs. Now Can you answer me few questions:

Does this avail under Capital Gain Section ?

Do I need to repay the Complete Principal and Interest Exemption availed from Income Taxback to Govt ?

Pl. help me with Tax Implications on the Sale.. I am already in HUGE LOSS with this house, so pl guide me with your interest and knowledge.

I am planning to purchase another house(valuing 40 Lakhs) in next 6 months using this 6.5 Lakhs as Down-Payment..

Thank You

Chandu

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5 Replies

Mazhar Shaikh (Intern) (72 Points)
Replied 29 February 2012

Ans

1) it Will Calculated under Capital Gain Section But you will be getting a Capital Loss of Rs5,00,000

2)No ur principal and interest payment want be diasallowed

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chandu (Consultant) (28 Points)
Replied 29 February 2012

Hi,

Can you explain me in much detail regarding point 1, Capital Loss of 5,00,0000.. If it is capital Loss then why it will be calculated under Capital Gain Section .?

PRADEEP REDDY (CHARTERED ACCOUNTANT) (664 Points)
Replied 01 March 2012

hi chandu,

1. As the sale consideration received is less than cost of acqusition there is no question of capital gain, so need to pay any more tax.

2. since you have transffered the asset (residential house) with in 5 years from date of acqusition(from August 2007 to Feb 2012_ 4 years 6 months) , principal amount which is allowed as deduction under section 80 C from A.Y 2008-09 to A.Y 2011-12 will treated as income of A.Y 2012-13 i.e F.Y 2011-12 (but interest allowed under section 24 B will not treated as income)

3.you have to face above consequence even if you invest 40 lakhs in buying another house

4.In order to avoid treating of principal amount which is allowed as deduction under section 80 C from A.Y 2008-09 to A.Y 2011-12 as income of A.Y 2012-13 i.e F.Y 2011-12 ,it is adviseable to sell the house after the expiry of 5 years from the date of acqusition i.e after july 2012.