Keith (A) 11 May 2012
Hello
I tried searching but couldnt find a similar question.
I have 2 apartments. One purchased in 2005 and another that I bought 4 months ago. I would like to sell the first apartment and prepay the bank loan on the second apartment. If I do this, would I be exempt from paying Capital Gains tax?
Additional information
- I am an NRI
- the first apartment price has appreciated from 15 lacs to 65 lacs
Thank you
Sagar Tilak (PROPRIETOR) 17 May 2012
Yes..You can claim exemption u.s 54.
The LTCG amount is required to be invested in the new house property which is purchased one year before or two years after the date of transafer of house property. In your case, as you have purchased a new house 4 months back i.e. one year before the date of transfer. The amount of capital gain will have to be invested in new house property. The section 54 does not prohibit repayment of housing loan to claim exemption u/s 54.
You can certainly go ahead and utilize the amount of sale proceeds for repayment of home loan. The case can certainly be argued before tax authorities based on the relevant case laws.
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