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I sold my flat for 33 lakhs and used the proceeds to repay a home loan. What is my tax liability?

Mihir

Mihir Tanna  |942 Answers  |Ask -

Tax Expert - Answered on Jul 22, 2024

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more
Nitish Question by Nitish on Jul 15, 2024Hindi
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Hi Mihir, I purchased a flat in the year 2012 for 21.55 lakhs and sold the same in 2023 for 33 lakhs. The sale proceeds from the flat was used to repay a home loan. What would be tax liability?

Ans: Deductions are available for housing loan, if prescribed conditions are satisfied. Also sale of house property will be subject to long term capital gain tax.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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I purchased a flat for 43 lakhs in 2011. I obtained a loan of 26 lakhs for the same. If I sell the flat now, I would likely receive around 1.2 crores. The flat is jointly owned by my wife and me (I fall above the 30% tax bracket, and my wife is not employed). I plan to invest the entire proceeds in constructing a new house on a residential plot that is in my wife's name. Will I still need to pay taxes, and if so, how would the calculation be?
Ans: You plan to invest the entire sale proceeds in constructing a new house on your wife’s plot. Under Section 54 of the Income Tax Act, you can claim an exemption on the capital gains if you reinvest the amount in a new residential property within a specified period. Since the new house is in your wife’s name, ensure that the reinvestment meets the criteria of Section 54 to claim the exemption.
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Since the flat is jointly owned, each of you must reinvest your respective share of the capital gain to claim the exemption. As the new property is in your wife's name, you might still be eligible for the exemption if the entire capital gain amount is utilized.

Consult a Certified Financial Planner:
Given the complexities and the involvement of joint ownership and different tax brackets, it's advisable to consult a Certified Financial Planner (CFP) to ensure that the transaction is structured correctly to minimize or eliminate tax liability.

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www.holisticinvestment.in

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