S S Singh (Sr. SE) 11 January 2011

Urgent - Sell and then re-purchase same flat on home loan

I had bought a flat almost a year ago, completely without loan. I’ve the sale agreement/possession letter from builder, but not done registry of the flat yet.

Now I’m interested to purchase a land/plot and do not want to build it for at least 5 yrs. But I want to buy land on home loan.

Because getting home loan for only land is not as easy. So I was thinking for following:

1. Sale my flat to my father in law and through builder, transfer the flat to in name of my father in law.

3. After couple of months purchase back the flat from father in law, but this time with home loan from Bank.

4. Through money raised from sale of flat, I can buy land/plot.

Please suggest:

1. Is there any legal objection/hurdle if I follow above?

2. Shall banks allow me for Home Loan for purchasing flat from my father in law?

3. Can my father in law pay me after he receives money after I re-purchase from him on bank home loan?

Please advise its very urgent.

Thanks!!!

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4 Replies

A V Vishal (Advocate) 11 January 2011

You will attract Short term Capital gains and will be taxed at 30% so if you are ready to pay this amount you can be advised on the remaining points of your query. Further, on STCG no exemptions can be claimed unlike LTCG

Adv. K.S.A.Narasimha Rao (legalquestadvisor@gmail.com ) 12 January 2011

Dear S S Singh,

As per the home loan for plot of land will be given subject to a cluase tht you will be going to construct a house within 5 years, purchase the plot and before the end of fifth year u can obtain a permission from the concerned municipality. It will only make you loose lot of money.

S S Singh (Sr. SE) 13 January 2011

Mr. Vishal,

What if I sell the flat at the same rate I had purchased. Say I had bought for 10 Lakh and sell for 10 Lakh. Then do I still get entitled for STCG?

Thanks.

S S Singh (Sr. SE) 13 January 2011

Mr.K.S.A.Narasimha Rao,

I think banks give home loan for plots with clause to construct within 2 years not 5 years. But my personal circumstances are that I do not want to construct for atleast 5 years. This is why I do not prefer to get home loan for plot.

Please suggest?

Thanks.