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Mihir Tanna |1018 Answers |Ask -Follow

Tax Expert - Answered on May 23, 2023

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

Asked by Anonymous - May 23, 2023Hindi

Hi Mr Mihir, I have in all four properties (inherited and purchased) which I am holding in the following manner – two of them 100% owned (one residence in which I am living & one shop), one 50% owned (residence) and one 25% owned (residence). Except for the one property in which I live, rest all are let out on rent and my co-owner in all the jointly owned properties is my sister. I am planning to sell the commercial property and purchase a residential property for better rent prospects. I want to know: Do I have to sell of all other residential properties as well (except the 100% owned residence where I live) to get the benefit of 54F while buying the new residential property (because then I won't have any other residential property except the one in which I live) OR Can I get the benefit of 54F by selling only the one commercial property and using the entire proceeds to buy the new residential property to be let out on rent (which means I will continue to hold 50% and 25% ownership of two other residential properties, as the second holder in both the cases). Also, in case you say that I must compulsorily sell all the jointly owned residential properties as well to get the benefit of 54F while buying the new residential property so that I have only ONE residential property when I go to buy the new residential property – will I get the benefit under 54F if I sell multiple properties and buy one single residential property which matches the amount of capital gain + sale proceeds of the commercial property? I also wanted to know that I may have to take a home loan while buying the new residential property (to be let out on rent), therefore, what would be the amount which I will be allowed as deduction from my total income as I have an existing home loan since 9 years on the 100% owned residential property in which I am living. I have always been a salaried class person with income under Rs 50 lakh and ALL the above-mentioned properties, related incomes and home loan etc are already disclosed in my IT returns. – SB

Ans: To get the benefit of Sec 54F, person should not own more than one house property on the date of transfer of asset and not on the date of acquiring new residential property.

Further, with reference to buying a single house property against capital gain from multiple long term capital asset, in my view, Sec 54F benefit is available if sale proceeds from all long term capital asset is invested in buying a single house property. However, it can be subject to litigation.

With reference to deduction on housing loan, principal repayment deduction upto 1.5 lacs in overall limit of 80C , 2 lacs deduction on interest on self occupied house property and entire interest deduction on loan for rented house property will be allowed. However, loss from house property can be set off upto 2 lacs against other income subject to other specified conditions

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