Selling an unregistered flat at double the price - what are my tax options?

Ans: Your initiative to prepay your home loan and invest for tax benefits is very thoughtful.

Let’s analyse your case step-by-step from a 360-degree perspective and give you a proper plan.

 

Tax Implications on Selling the Flat
You bought the flat in 2021 and now plan to sell in 2025.

 

 

Holding period is less than 24 months (because registration is not yet done).

 

 

So, this is Short-Term Capital Gain (STCG) as per income tax rules.

 

 

Short-Term Capital Gains on property are added to your total income.

 

 

Tax will be payable as per your income tax slab.

 

 

There are no exemptions like Section 54 for STCG — only for LTCG.

 

 

Since registration is pending, the sale may be seen as transfer of booking rights, not property.

 

 

This falls under Section 2(47) of the Income Tax Act.

 

 

It is better to consult a chartered accountant for exact treatment.

 

 

Important: Keep all payment records, allotment letters, and bank statements safely.

 

Home Loan Prepayment – Any Tax Benefit?
Prepaying home loan is a great step if funds are available.

 

 

However, no extra tax benefit is available just for prepaying the loan.

 

 

You can claim interest under Section 24 (up to Rs 2 lakh per year).

 

 

Once you prepay and close the loan, this interest deduction stops.

 

 

So, this is a personal choice. Financially, it reduces debt and brings peace of mind.

 

 

But if your home loan interest rate is low and under control, consider keeping it and investing surplus.

 

What to Do With the Surplus Money
Let us assume your net gain after repaying the home loan is around Rs 70-75 lakh.

Let’s see how to smartly deploy this amount.

 

A. Emergency Fund (Rs 3-5 lakh)
Keep aside this amount in a liquid fund or sweep-in FD.

 

 

This will help during health emergencies or job loss.

 

 

This gives mental peace and financial safety.

 

B. Home Loan Prepayment (Rs 25 lakh)
Go ahead with this if peace of mind is your top priority.

 

 

There is no penalty for prepayment in floating rate loans.

 

 

It also saves future interest outgo.

 

 

But you lose out on tax deduction under Section 24.

 

 

If the interest is below 8.5%, partial prepayment is better.

 

C. Invest in PPF (Rs 1.5 lakh per year)
Open PPF if you don’t already have.

 

 

Invest maximum Rs 1.5 lakh per year for 15 years.

 

 

You get tax deduction under Section 80C.

 

 

Returns are tax-free and backed by Government.

 

D. Invest in ELSS Mutual Funds (Rs 1.5 lakh)
ELSS offers the shortest lock-in (3 years) among tax-saving options.

 

 

Invest up to Rs 1.5 lakh per year under Section 80C.

 

 

Choose Regular Plans via a Certified Financial Planner (CFP), not direct plans.

 

 

Regular plan investments offer ongoing advice, portfolio review and guided support.

 

 

Don’t get tempted by direct plans just for lower expense ratio.

 

E. Invest in Tax-Saving FDs (Optional)
This is also eligible under Section 80C.

 

 

But it gives lower returns compared to ELSS or PPF.

 

 

Consider this only if you need guaranteed returns.

 

F. Invest in Balanced Advantage Funds (Rs 10-15 lakh)
These funds balance risk and return very well.

 

 

Ideal for medium-term goals (4-6 years).

 

 

These are actively managed funds that shift between equity and debt smartly.

 

 

Avoid index funds and ETFs — they lack fund manager expertise.

 

G. Invest in Flexi Cap Mutual Funds (Rs 15-20 lakh)
These funds invest across large, mid, and small cap stocks.

 

 

Over 7-10 years, they help create solid long-term wealth.

 

 

Choose regular plans with support from a CFP and MFD.

 

 

Avoid direct funds if you want personalised support and regular tracking.

 

 

Direct plans need self-monitoring. Wrong timing may lead to losses.

 

H. Invest in Multi Asset Funds (Rs 5-10 lakh)
These funds invest in equity, gold, and debt together.

 

 

They give better diversification and handle volatility well.

 

 

Good for medium-term goals and reduce emotional investing mistakes.

 

I. Retain Some Amount in Arbitrage Funds (Rs 5 lakh)
These are good for short-term parking with low risk.

 

 

Returns are better than savings account or FDs in many cases.

 

 

Ideal if you need money in 6–12 months.

 

Tax Saving Tips to Consider
Invest up to Rs 1.5 lakh under Section 80C – use mix of PPF + ELSS + life insurance premium.

 

 

Use Section 24 for home loan interest deduction till you prepay the loan.

 

 

Consider Section 80D for health insurance premium for self and parents.

 

 

Do not invest in annuity products — they are tax-inefficient and inflexible.

 

 

Do not fall for real estate again, as it lacks liquidity and has high transaction costs.

 

Important Mistakes to Avoid
Avoid investing everything in one type of product or asset class.

 

 

Avoid direct mutual funds unless you can manage everything yourself.

 

 

Don’t invest too much in sectoral or thematic funds — high risk, low consistency.

 

 

Don’t chase short-term returns or switch funds based on trends.

 

Systematic Investment Plan (SIP) Suggestion
Start SIPs with Rs 25,000–30,000 per month in Flexi Cap, Large & Midcap, and Balanced Advantage Funds.

 

 

Increase SIP every year with your income — this ensures wealth compounding.

 

 

Use the remaining lump sum in phased investment via STP into equity mutual funds.

 

 

This avoids market timing and gives smoother entry.

 

How to Monitor
Do quarterly portfolio reviews with your Certified Financial Planner.

 

 

Track your progress towards future goals like children’s education, retirement, etc.

 

 

Use goal-based investing to stay motivated and disciplined.

 

 

Always consult a CFP and MFD for personalised fund selection and review.

 

Finally
You are already in a strong position with good real estate profit.

 

 

Focus now on reducing debt, saving taxes, and long-term investing.

 

 

Use your surplus wisely with a balanced portfolio.

 

 

Avoid complexity — keep the portfolio simple, diverse, and goal-aligned.

 

 

With the right plan and regular reviews, your wealth will grow safely.

 

 

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment