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.
1 Answers
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.
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