LTCG Tax and Home Loan Repayment

Dear Sir,

I am Sandeep Mehta from Baroda, Gujarat. Greetings of the Day. Below is my query.

I purchased a residential flat in the year April 2008 with cost of 5.6 lacs. I tool loan from HDFC for 4.9 lacs. Principal outstanding on the loan is about 3.6 lacs. I also took Home Equity Loan on this property for 3 lacs in the year 2010. Current outstanding on that loan is 2.94 lacs. I have done the deal to sell the property in June 2011 for 9 lacs. I can repay both the loans from my own account and even from money received from the buyer. In this case how the Long Term Capital Gain Tax shall be calculated and what it would be? I am planning to invest the sell amount for buying another property.

Please suggest.

Sandeep Mehta

asked Jun 05 '11 at 10:46 by sandeepmehta0 1111

Income tax will be computed as per below calculations. CII for 2011-12 has not been declared yet and its taken same as of 2010-11 below, which needs to be changed once declared.

Purchase Year = 2008-09
Purchase Cost = 560000
Cost Inflation Index (CII) for purchase year = 582

Sale Year = 2011-12
Selling price = 900000
CII for sale year = 711

Indexed Purchase price = 560000 x (711/582) = 684124
Long term capital gain = 900000 - 684124 = 215876
Income tax on capital gain = 215876 x 20% = 43175.2

If you buy another residential property within 2 years of sale with price more than 2.15 lacs then there won't be any income tax.

answered Jun 08 '11 at 08:40 by Pankaj Batra 5.2k320


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Asked: Jun 05 '11 at 10:46

Seen: 1,915 times

Last updated: Jun 08 '11 at 08:40