Repayment of Loan from Capital Gains on sale of Property

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  1. Rajbir Singh

    Rajbir Singh New Member

    Can I repay my loan of an under construction flat from the sale proceeds of my house and yet claim capital gains exemption. The possession of this new flat is likely to be within two years of the sale of my old property.
     
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    Yes, you can repay the loan to claim capital gains exemption provided the new property was purchased max 1 year before the sale of the old property.
     
  3. Rajbir Singh

    Rajbir Singh New Member

    Please advise me the date of purchase is considered to be the date of possession of the house or the I booked the house by making first partial payment
     
  4. gaurav_kumar

    gaurav_kumar Well-Known Member

    The date on which you booked the flat by making the 1st partial payment is considered as the date of purchase.
     
  5. Rajbir Singh

    Rajbir Singh New Member

    Is
    Is there any way I can save capital gains tax in this situation
     
  6. gaurav_kumar

    gaurav_kumar Well-Known Member

    Please share the facts of the case that is the dates and then only we would be able to help you with your query
     
  7. Rajbir Singh

    Rajbir Singh New Member

    First of all please accept my sincere thanks for the selfless service being provided by you with so much of patience and time investment. I bought a flat in Panchkula in year 1999. Thereafter, I bought a flat in Noida in Jan 2012 in a 40/60 scheme. I have paid already 40% for this flat and rest is to be paid on possession which is likely to be in mid 2016. Subsequently, I bought a flat in Gurgaon in a subvention scheme in Jun 2012 for which bank has given a loan to me of 57 lacs in Nov 2012. The EMI burden of this loan will come on me wef Nov 2015 as till then the pre EMI interest is being paid by the builder under the subvention scheme. The possession of this flat is likely to be in end 2016/2017. Now if I sell my first flat in Panchkula somewhere in end 2015 and pay my loan for the Gurgaon flat or use this money for paying rest 60% of my payment due for Noida flat, can I save on the capital gains tax. Thanks and regards.
    Group Captain Rajbir Singh.
     
  8. gaurav_kumar

    gaurav_kumar Well-Known Member

    Dear @Rajbir Singh

    1. The date of purchase and the date of sale are considered for the purpose of income tax. The date on which the payments are being made are not being considered.

    2. To claim exemption from Capital Gains, you should reinvest the capital gains either 1 year before or 2 years after the sale of the property. In your case, you are selling the property in 2014 and reinvesting in a property which you purchased in 2012.

    As the property was purchased more than 1 year before the sale of the Panchkula property, therefore you cannot claim Capital Gains Exemption in this case.
     
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