Gokul Eswaran (Executive) 29 December 2009
Hello all, I have an ancestral property in Tamil Nadu and I am going to sell it very soon. I am a resident of bangalore and I purchased a house recently, the house is on loan. I am told that the proceeds from the sale of my ancestral property has to be invested in another property within 5-6 months else it will attract tax. Can I use the proceeds from the sale to foreclose my housing loan?
A V Vishal (Advocate) 29 December 2009
Yes you can foreclose the loan account with the sale proceeds and it is deemed that the money is invested in the purchase of the new capital asset. However certain care should be taken to see that the entire capital gain is invested in the property else on the balance you might end up paying taxes .
adv. rajeev ( rajoo ) (practicing advocate) 29 December 2009
OK you can use the sale proceeds to repay the existing housing loan. Such transaction amounts to investment in capital asset within 36 months.
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