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How to Use LTCG for Tax Benefit on Home Purchase (Scenario-Specific)?

T S Khurana |186 Answers |Ask -Follow

Tax Expert - Answered on Aug 06, 2024

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more

Question by DEBASHISH on Jul 24, 2024Hindi

Hello, Could you help me to understand, If below scenario is valid to get tax benefit. Please read all below four points before answering questions. Point1: Sale agreement date of apartment = Jan 2023. Point2: 60 percent of apartment cost(with self + home loan) paid to builder till now (July 2024). Point3: Suppose, I sold stocks(Sept 2024) and invested LTGC to finance remaining 40 percent of apartment cost through instalments (before this FY end Mar 2025). Point4: Expected possession date of apartment = Oct 2025 (Actual home registration date). Question1. Am I eligible to claim this LTCG tax benefit under section 54F in above scenario for FY24 -25? Question2. If I am eligible for LTCG tax benefit , Do we need to put LTGC amount in capital gain account till possession of property? Or capital gain account is not needed , as LTGC amount is already invested to finance the remaining 40 percent of apartment cost in this FY24 -25 ? Question3: If I am eligible for LTCG tax benefit , Can I use LTCG amount for prepayment of home loan in this FY24 -25 and get Section 54F tax benefit ? Questions4: If only option remain is to save in capital gain account for tax benefit in FY24 -25. I really want to avoid to save LTCG in capital gain account. In this case, Suppose, I sold stocks(After current FY e.g. Apr 2025) and use LTCG amount for prepayment of home loan. Can I get tax benefit in this case for FY25 -26(Assuming possession date of apartment = Oct 2025)

Ans: Q.No.1. You are eligible for LTCG exemption u/s 54-F during F/Y 2024-25.
Q.No.2. You are not required to keep this amount in Capital Gain Account & you may pay directly 40% cost of apartment to the builder.
Q.No.03. You may use this amount for Repayment/Prepayment of Housing Loan also, but please ensure that payment to the builder, during one year before sale of stocks, should not be less than Capital gain on stocks.
Q.No.04(a). You may not keep your money in Capital Gain Account & instead pay to the builder directly.
Q.No.04(b). In case you sell your stocks in f/y 2025.26, you can still avail the Tax Benefit in F/Y 2025-26.
Hope it takes care of your quarries. Most welcome for any further details. Thanks.

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