Taking home loan to invest long term capital gain

I purchased land in Gurgaon in March 2011 for 80,00,000 from my own and borrowed money. Later, in April 2011, I sold my apartment in Chandigarh (not self occupied) for 90,00,000 and used that money to repay the loans and manage my finances. Out of this 90 lakhs, LTCG copes to roughly 50 lakhs.

Now I plan to buy another apartment for Rs.60 lakhs in Noida. Can I take a bank loan for the same and claim Capital Gain tax exemption on the money so invested in buying this apartment and also claim 1.5 lakhs tax exemption for home loan?

Or do I need start construction on the plot and complete the same within next 2 years to claim LTCG tax exemption. Is that possible, since plot was purchased before sale of apartment. Act says (BUY a house either 1 year before or after and CONSTRUCT a house within 2 years from the sale).

Please advice

asked May 20 '11 at 07:01 by ajit_72 1111

As you are buying a new property for amount 60 lakhs which is more than the capital gains (50 lakhs), you are eligible for tax exemption on capital gains under section 54.

You can claim exemption for home loan interest too for the new property purchased.

Other option to save income tax is to construct a house on land before April 2014.

answered May 24 '11 at 14:07 by Pankaj Batra 5.2k320


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Asked: May 20 '11 at 07:01

Seen: 2,639 times

Last updated: May 24 '11 at 14:07