Long Term Capital Gain against Loan Repayment to Relatives & Power of Attorney

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  1. Bhupinder Sohal

    Bhupinder Sohal New Member

    I bought property A for 15 lakhs in Jul 2012 (i.e. Got certificate for Co-operative society in 2012, payment started in 2009)
    Subsequently I also bought property B, which is under-construction as of now (Jul 2016). It should be completed in a year or 2.
    For property B, I got help of 25 lakhs from relatives (These were transfers to my bank account, between 2012 and 2015, from multiple accounts)

    Now I want to sell property A for 30 lakhs & repay 25 lakhs to my relatives to be even.

    1. First is this good idea to be even in the bank accounts?
    2. As I am repaying back to my relatives with the property profits, can the profit be tax-exempted?
    3. We do not have any formal document for this loan from relative. Can the tax exempt still apply.
    4. Is there any option to directly transfer to the relatives' accounts while I sell the property?

    Please let me know the procedure or necessary documentation to facilitate this.

    Furthermore, I am planning to create a power of attorney to my relative to sell property A, as I am in different city. Can the payback to relative be provisioned in the power of attorney somehow?

    Please respond. Hoping to get quick response.

  2. Karan Batra

    Karan Batra Well-Known Member

    1. Receive the amount in your own account and then repay your Relatives
    2. The amount would be tax exempt under Section 54 as you have purchased another Residential Property
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