long term capital gains - housing property

my father is retired person with annual pension equal to rs.1,50,000.00. Recently my father sold our house for Rs. 10,00,000.00. now he is living with me. i had my own flat & paying home loan for it. kindly guide does my father dealing will attract LTCG & if yes how much. Is there any way to avoid such tax. can he repay my home loan to avoid LTCG. kindly guide me for the same.

asked Oct 10 '11 at 17:03 by BHALCHANDRA 1111


There will be long term gains arising from house sale. Please compute LTCG from below provided sample computation.

Purchase Year = A
Purchase Cost = P
Cost Inflation Index (CII) for purchase year = X

Sale Year = B
Selling price = Q
CII for sale year = Y

Indexed Purchase price = P x (Y/X) = R
Long term capital gain = Q - R = S
Income tax on capital gain = S x 20%

To save this income tax fully, a new house property can be purchased by your father with cost more than gains computed above (S) u/s 54 or whole gains (S) can be invested into capital gain bonds u/s 54EC.

There won't be any tax benefit if home loan prepayment is done from LTCG.

answered Oct 11 '11 at 12:28 by pankaj 5.2k320

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Asked: Oct 10 '11 at 17:03

Seen: 1,239 times

Last updated: Oct 11 '11 at 12:28