AS........ (service) 21 June 2013

Long term capital gain on property sale

Dear friends.

I purchased a house property jointly with my father on 26th March 2012 for Rs. 4000000/- by raising a housing loan of Rs 3000000/- jointly. Father being retired person could not serve the loan and hence I paid entire loan EMI from my salary account.

My father sold an old house (solely in his name) for Rs. 2900000/- on 20th March 2013 (within one year of purchase of new house) and used the sale money to pay the balance house loan (Aprrox. 2600000/-) and finished the loan.

The old house land was purchased in 1976 for Rs. 4000/- total. The house was constructed in steps, i.e. Rs. 40000/- in 1984, Rs. 80000/- in 1995, Rs. 150000/- in 1998 and Rs. 50000/- in 2004. We do not have receipts for the same.

Please help with following.

(i) Can I take rebate under sec 24 for interest on loan which has been served entirely by me.

(ii) How the LTCG will be calculated? Can my father take the benefit of LTCG which has been used to repay the entire loan?

Thanx in advance,

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4 Replies

Adv k . mahesh (advocate) 21 June 2013

this query is very interesting but a tax consulltant is the best expert to exlaing about this

VISHNU PROMOD SRIVASTAVA (ADVOCATE) 21 June 2013

pl. inform the house which has been purchased jointly in march'2012 whose is first name?

Vineet (Director) 24 June 2013

You have to declare specific share of each co-owner in the newly acquired house and contributions to be adjusted among you and your father accordingly. I presume, the share is equal.

You can avail benefit of 50% of the interest paid on bank loan.

You father can avail benefit of section 54 exemption in respect of Rs 20 Lakhs (his share of investment in new property). Long term capital gains on sale of old hous to be computed by availing indexation benefit on value of house as on 1-4-1981. (you have to get value as on that date from local valuers). In absence of receipts, it would be difficult to get benefit for cost of improvement.