Short Term capital gain tax in case of new property buy

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bappaditya

bappaditya@gmail.com

25 Points Posted on 29 April 2011

Hi CA experts,

I have tax question.

I was allotted a house in 2003 by a Govt housing sceme for 30L. I took a part loan of 20L and have paid all the money to Govt. as well as bank(+10L interest). The project has got completed just now and registration will happen in 2 months. I have a few questions.

1. If i sell this house, will this be short term capital gain or long term capital gain?

2. If it is short term capital gain, will it consider 30L as the cost price or can i add the bank loan interest to cost price?

3. I intend to buy another house this year. Can i someway wave off the tax liability of selling the old house by buying this new house?

Any answers/insights will be appreciated from the bottom of my heart.

Thanks and regards,

Bappa

Replies (3)

U S Sharma

glidor@gmail.com

21068 Points Posted on 29 April 2011

as the registration is not in your name and you are not in position, the payments including the interest ( if you have capitalized the interest) are advance payment against property, you can not get long term benefit here.

as the house does not belong to you unless you get it registered in your name as well u occupy the posesion,

you can take a step to get it registered in name of 3rd party direct, then in that case your investestments may get qualified for LTCG

for a clear guideline, meet any CA of your area, with a clear view and related documents.

bappaditya

bappaditya@gmail.com

25 Points Posted on 29 April 2011

Thanks Mr Sharma.

Any idea bout my questions 2 and 3?

Originally posted by : U S Sharma
	as the registration is not in your name and you are not in position, the payments including the interest ( if you have capitalized the interest) are advance payment against property, you can not get long term benefit here. as the house does not belong to you unless you get it registered in your name as well u occupy the posesion, you can take a step to get it registered in name of 3rd party direct, then in that case your investestments may get qualified for LTCG for a clear guideline, meet any CA of your area, with a clear view and related documents.

U S Sharma

glidor@gmail.com

21068 Points Posted on 29 April 2011

if you are able to arrange 3rd party registration then visit any nearby CA who will guide u best, how to handle the LTCG, as it need steady of your allotment and related documents alongwith payment installments and admissibility with your previous year(s) return filed.

I hope you would be able to enjoy a NIL tax burden if u buy a new house with that money, under the prior consultation with a good CA